SIMPLYGRAY

Youshang.com SaaS Paying Accounts hit 77,000

2009-11-27T10:24:00.001-05:00

China's paying accounts rose 30.9% quarter on quarter to 77,000 in the management-type software-as-a-service (SaaS) market in the third quarter of 2009, according to a data report released lately by Analysys International.

Of the total paying accounts, 21,800 or 28.2% were from www.Youshang.com, an e-commerce platform under Kingdee International Software Group Co., Ltd. (SEHK: 0268). Youshang.com ranked first in the SaaS market in the quarter.

The followers were www.wecoo.com and www.eabax.com. And next came www.800app.com, Xtools, and www.mainone.com, with a less than 10% market share, separately. In particular, Salesforce.com only captured a 1.7% slice.

Besides, the nation's management-type SaaS market is predicted to grow rapidly in the near future, and it will hit CNY 720 million by 2011, with a 76.27% compound annual growth rate, said Analysys International.

Now, some Chinese small- and medium-sized companies have begun accepting SaaS, so, we should be optimistic about the future, said an Analysys International analyst.

A case study in profits and job losses

2009-11-26T17:13:00.001-05:00

STEPHEN PAGLIUCA'S run for the Senate seat left vacant by the death of Senator Edward M. Kennedy has stirred up memories of the bitter 1994 challenge for the seat by Mitt Romney. When polls showed Romney edging ahead on the basis of his business experience, Kennedy's media consultant, Tad Devine, went to film angry workers at Ampad, one of the companies that had been fleeced bare by Bain Capital, a private equity firm that Romney owned. Was Kennedy just playing rough and tumble politics as Pagliuca has alleged, or did he have a valid point to make about Romney's type of business experience? And does that point apply to Pagliuca as well?

Private equity firms buy companies under an unusual arrangement - they force the companies to take on huge debt obligations to finance, in essence, their own purchases. The buyout kings then pay themselves huge fees for running these companies, well before it is determined whether they ran them well or into the ground. A Davos study shows that once in control, private equity firms cut more jobs than competitors. And according to a University of Chicago study for the years 1980 to 2001, investors in private equity firms also lose, receiving returns that fell short of the broad market averages.

Consider the private equity buyout that took place under the direction of Bain Capital and Stephen Pagliuca - that of Dade Behring, an Illinois lab equipment manufacturing firm that was bought by Bain and was ultimately left with about $450 million in debt. What happened after its purchase?

While lab-equipment manufacturers typically allocate 10-to-15 percent of sales to research and development, under Bain, Dade spent nearly half, 6 to 7 percent - $61.7 million in 1997 and $88.2 million in 1998. The anemic R&D spending fit the pattern of recent private-equity excesses - first because Dade Behring needed money to pay off the debt Bain had loaded it down with, and second, because Bain lacked the proper incentives to build a company it planned to exit within five years.

Like clockwork, nearly five years after its initial investment, Bain was practicing its exit dance, changing the employee benefits package for many workers from a defined-benefit pension plan, in which employees were entitled to about 75 percent of the average of their combined salary in their last three working years, to a cash-balance plan, saving the company perhaps $10 million to $40 million from the conversion. The same month Dade used the projections of that very savings as part of the basis to borrow $421 million, $365 million of which it turned around and used to buy back some of Bain and co-investor Goldman Sachs Capital Partners' shares.

The Standard & Poor's rating agency believed the company with the added debt would be unable to pay its interest if it faced adverse business conditions.

With added debt, new areas had to be cut. Dade's Miami office, which had 850 employees in 1999, consolidated operations with a similar division in Germany. Pagliuca told the Globe that job cuts were necessary to improve Dade's performance. But by then it didn't matter how many divisions were consolidated or workers fired. Nothing could save the company from its crushing debt load. Finally, the decline in the value of the euro, which Dade was too cash-strapped to hedge against, caused the company to collapse. It filed for bankruptcy in August 2002.

Dade's creditors took over the business, and Bain lost all its shares. But, Bain and Goldman - after putting down only $85 million to buy Dade and receiving the $365 million distribution, made out like bandits - a $280 million profit. Later, the Globe reported, creditors alleging these gains were "illegal dividends'' got the private equity firms and other entities to pay them back $68 million of the $365 million.

Did this company have to be treated this way? Was it making a bad product? Was it at the end of its productivity? After the bankruptcy, creditors agreed to cut the company's debt by more than half in exchange for company shares. They saw that if Dade focused on growth and not on juggling its debt load, it had the potential to be a strong business. Dade began pumping money into R&D - more than 8 percent of revenue in 2003, 2004, and 2005. By 2006, Dade's sales had risen 40 percent. The next year, Siemens bought the company for $6.7 billion, five times more than its value at the time of the bankruptcy.

Pagliuca said recently that the Kennedy ads showing the bitterness of laid-off workers were unfair because they distorted the entirety of Romney's body of work. An examination of Bain's record, and Pagliuca has been a key member of Bain since its early days, shows that Bain made big profits out of six formerly healthy companies it helped drive into bankruptcy (Stage Stores, Ampad, GS Technologies, Details, KB Toys, and Dade). During the credit boom from 2005 to 2007, Bain bought 22 businesses. Moody's Credit Rating Service in November said 10 of those companies, including Clear Channel Communications and Guitar Center, are either distressed or in default, 45 percent of the total.

I am not a resident of Massachusetts and take no side in this campaign. But I agree with Pagliuca that the entirety of a man's work be available to voters before they throw the lever.

SupportSpace Raises $10 Million Series B

2009-11-26T16:29:00.001-05:00

SupportSpace, a company that provides on-demand remote tech support solutions, announced today that it has raised $10 million in funding. The round was led byEmergence Capital Partners and also included previous investors BRM Group and Gemini Israel. SupportSpace has raised $24.25M in total funding so far. Kevin Spain of Emergence Capital Partners has also taken a board seat as part of the funding.

SupportSpace, founded in 2006, aims to help expand their remote tech service by offering a SaaS (software as a service) platform for the management, marketing and delivery of remote services and a network of virtual experts.

To get tech support using SupportSpace, you choose a service or an online expert, then connect to the expert and watch your problem being resolved on your screen in real-time.

According to SupportSpace Co-Founder and CEO Yair Grindlinger, SupportSpace will use the funds to enhance its infrastructure, expand its team, and acquire new partners.

Investimonials Wants To Be Your Guide To Quality Financial Products

2009-11-26T16:14:00.001-05:00

If you've ever tried searching the web for financial advice, you probably know just how much junk there is out there. Sure, there may be a few diamonds in the rough, but oftentimes the best results go to the finance 'experts' who are good at SEO – not the ones who know what they're talking about. Investimonials is a new site launching this week that's looking to offer an unbiased view of the variety of financial brokers, services, videos, and books out there. And to do that, it's turning to the site's community to submit their own reviews (it's essentially a TripAdvisor for financial goods).

The new site was founded by Timothy Sykes, a controversial financial expert who was named to Trader Monthly's 2006 "Top 30 under 30″ and had a once-successful hedge fund that shut down in 2007 after taking heavy losses. Since then, though, he's mounted a comeback and is now one ofCovestor's top ranked traders (though some people aren't fans of his tactics).

Sykes says that his goal with Investimonials is to help users cut through the spammy and scammy financial sites that litter the web, by offering a comprehensive hub of user reviews for each product. Investimonials will be launching with eight categories, including the top rated Brokers, Newsletters, DVDs, Books, and websites, with plans to have "dozens" over the next few years. At launch the site has 3,000 products ready to review, though the vast majority of them haven't been reviewed by anyone yet.

Sykes says the primary competitor in this area is EliteTrader, which has been around for a decade and has around one thousand total reviews (the site also looks pretty dated).

Investimonials incentivizes users to write reviews and share their personal contact information by offering 'iv bucks', which can be traded in for prizes. Many of these are Sykes's own products, though there are a variety of prizes from others as well.

Investimonials seems like a good idea, though it's going to have to be very transparent if it wants to avoid constant accusations of bias. And as with all review sites, it's going to suffer from the chicken-and-the-egg problem – until it has a lot of reviews about products, few people will have a good reason to use it.

What If Steve Jobs Hadn’t Returned To Apple In 1997?

2009-11-26T14:54:00.002-05:00

Today is Thanksgiving in the U.S. Traditionally we take stock of the things that we’re thankful for on this day each year. And I realized that one of those things is Steve Jobs. I’m thankful that he returned to Apple in 1997 and did the things he has done since. It wasn’t at all a certainty that he would ever return to the company that he cofounded two decades earlier. In fact, it was only luck and coincidence that pushed him back there.

It was late December 1996. I was an associate at Wilson Sonsini Goodrich & Rosati, the largest and most well known law firm in Silicon Valley. I’d fought for my job there, and I was lucky to be in a small group of lawyers that worked on some of the hottest deals at the firm – Netscape public financings and acquisitions, Pixar’s corporate deals with Disney, and NeXT Software, among others. Steve Jobs ran Pixar and NeXT, and whenever he did something that needed a law firm, he called my boss. Well, my boss’ boss – Larry Sonsini.

That month Larry got a call. Steve was going to try to sell NeXT Software to Apple. He’d presented to the Apple board of directors, and his characteristic anti-charm won them over. They’d shortly pay about $400 million to get NeXT, with Steve Jobs returning to Apple as an advisor. It wasn’t long before he took the CEO job and started a more than decade-long run of hit products that have disrupted the computer, music, television, movie and telecommunication industries.

We worked night and day on that deal for six straight days, barely leaving the office and usually sleeping on the floor under our desks. When we were done, one of the partners drove me over to Steve’s house to get his final signature on the documents I remember stuttering in his presence about my first computer, an Apple II+. A few days later Steve left me a voicemail about an administrative issue. I saved that voicemail for years, until I left the firm. It was, all in all, a formative moment for me.

And even today, not that many people fully realize how unlikely it was that the deal would ever happen. Apple was also negotiating with Jean-Louis Gassée to acquire his company, Be Inc. Be’s operating system BeOS was probably a better product fit with Apple than NeXT. Apple offered a rumored $200 million for Be, but Gassée held out for far more. And so Apple went with Jobs at the last minute.

Here’s what the NeXT Software website showed immediately after the announcement:

What if Apple had bought Be, and Steve never returned to Apple? What would the company, and our world, look like today?

Apple Then, Apple Now

When Steve Jobs returned to Apple the company had just completed a fiscal year where they lost about $1 billion on $7 billion in revenue. The company was worth about $4 billion. Rivals like HP and Dell were worth about $62 billion and $8 billion, respectively.

Today Apple is worth a staggering $184 billion on revenues of $36.5 billion and net income of $8 billion. The company is now worth far more than HP and Dell combined. Hewlett Packard is worth just $119 billion, and Dell is worth $28 billion. You could throw another Dell in there and Apple would still be worth more.

In 1997 Apple had a snoozy product line that included the ill-fated Newton, the Performa, the Power Macintosh, the PowerBook a bunch of printers and a few servers.

User dependence on desktop software meant that only the very loyal or the very strange used Apple’s products. Everyone else wanted a common desktop platform.

Fast Forward to today. Apple has the sexiest products in the business: iMacs, Macbooks, iPhones, iPods and more. Even the Mac Mini has a place in my home, powering my television.

In the last three months of this last year alone, Apple sold 3 million Macs, 10 million iPods and 7.4 million iPhones.

But the hardware isn’t even the start of what Apple has done in the last 12 years. They’ve accelerated the pace of change in the music, film and television industries as well with the iPod and iTunes. And they’ve redefined the mobile phone with the iPhone.

If Gassée, or anyone else, had become the CEO of Apple back in 1997, how many of these products would exist today? Would Apple have ever made the first iPod, entering into an already saturated MP3 player market in the beginning of this decade? How likely would the iPhone have been? And next year we’ll see an Apple Tablet computer. Does anyone think anyone but Steve Jobs would have pushed that product to market?

I don’t think any of those products would have launched. Or if they did they would have been as notable as the MP3 players and phones launched by competitors like Dell and HP. Quick, who can name any of those products? Who’s owned one?

Our World Without Steve Jobs At Apple

Fortune recently named Steve Jobs the CEO of the Decade, and with good reason. Not only has Apple performed financially – it’s worth about as much as Google, and has a larger market cap than AT&T, HP, Intel, Dell and countless other huge tech companies.

But forget all that. What would our world look like without him? We’d likely still be in mobile phone hell. Chances are we still wouldn’t have a decent browsing experience on the phone, and we certainly wouldn’t be enjoying third party apps like Pandora or Skype on whatever clunker the carriers handed us. Even if you use an Android, Palm Pre or newer Blackberry today, you must thank Apple for pushing open the doors to mobile freedom. Think back to the phone you had in 2006, and then tell me you don’t love Apple for the iPhone alone (yes, I’ve moved on, but the iPhone was the genesis).

Steve Jobs was also the man who talked the major music labels into dropping DRM. He nearly single-handedly disrupted the entire industry. And it’s amazing how many laptops and desktops today mimic the look and feel of Macbooks and iMacs.

Apple certainly hasn’t done everything right (MobileMe comes to mind, and I have had nothing but trouble with the Macbook Air). And their stance on the iPhone is irritating and, well, sorta evil.

But all of that’s ok. Because without Steve Jobs’ Apple the world would be a less colorful place. The man is a living legend and deserves his place in history. This Thanksgiving, Steve Jobs is one of the things that I’m thankful for. And I bet you are too.

Mystery Buyer Coughs Up $1.5 Million For Russia.com

2009-11-26T14:38:00.002-05:00

The domain name russia.com has been purchased by an undisclosed buyer for $1.5 million through marketplaceSedo, reports Yakov Sadchikov over on the Quintura blog.

Currently an online guide for travelers who would like to visit the country, Russia.com is an operation of Paley Media, a Seattle, WA-based consultancy firm that runs the show for many a country domain name, including Algeria.com, Scotland.com, Nepal.com and Ukraine.com. The domain names are themselves owned by NewMedia Holdings, a company that registered the domain name russia.com back in 1995.

It's unclear why NewMedia / Paley Media decided to offload the high-value domain name, but I reckon one million and a half dollars is a fair price for a website that currently attracts a mere 9,000 unique visitors per month according to Compete. On the other hand, Korea.com was sold earlier this year for a reported $5 million.

We recently wrote about dominance of number of .com domains and also noted that .com domain registrations were starting to turn around again after a poor 2008. It looks like values of .com domains may be rising again: insurance broker Insure.com just sold its name and corresponding website for a whopping $16 million last month.

Other large domain purchases this year include the sale of Candy.com for $3 million, Toys-R-Us'acquisition of Toys.com for $5.1 million, the sale of Fly.com to Travelzoo for $1.8 million, and the sale of Ad.com for $1.4 million.

Weebiz.com - Find And Share New Business Opportunities

2009-11-26T14:20:00.002-05:00

If you are in the business world you already know that being able to get in touch with others is a precious ability. You can start making your business more effective and successful by using an interesting solution. Weebiz.com was created in order to give you many benefits when it comes to allowing the use of different capabilities in an online social network for your company.

In case you want to start learning about how to do this, you need to visit this site and register your company. Weebiz.com will give you access to an uncomplicated tool that will allow you to find business partners or clients anywhere in the world totally free of charge. In this way you will be able to share precious industry data that can be used to promote your company's products and services.

You do not have to wait for the opportunities to find you; instead you need to go for them. This could be a useful service you can take into account to find the good opportunities provided by the market. You only need to be in touch with other entrepreneurs that, like you, want to improve. Weebiz will position your company in a central place where you will be surrounded by opportunities. The site works very simply by maximizing your business network's performance connecting you with many other users.

Weebiz can be accurately defined as a network of companies formed by business owners, entrepreneurs, company managers and directors, as well as company workers. This could be a good chance for you to find new clients and partners, as well as to get in touch with suppliers looking for business opportunities. Give this site a visit and start promoting your products and services to make new business connections.

Preparing for Private Equity Financing

2009-07-02T19:09:00.000-04:00

Recently, typing the words private equity financing into a commercial search engine yielded 1,990,000 entries, more than a few announcing a funding victory.

"There is a significant amount of private equity capital chasing investment opportunities," says Atlanta-based Fentress Seagroves, managing director in PricewaterhouseCoopers' Transaction Services group. "And the pace is accelerating."

Though private equity funds may be interested in a variety of opportunities that fit specific objectives, including turnaround situations, Avery Tuchman, a director with PricewaterhouseCoopers' Transaction Services group in New York says, "the most marketable businesses tend to be those with solid cash flows, lower capital expenditure requirements, and products and services in markets viewed as growing."

Of course, the objectives of a business will determine the types of capital it pursues. "If a company can borrow what it needs, a debt facility will ordinarily provide a relatively low cost of capital," says Seagroves. "However, owners of mid-size companies seeking a way to get additional financing that their asset base or their equity base can't support or looking to create a liquidity event may want to explore private equity funding. Private equity can provide flexibility to achieve shareholder objectives, but it comes at a price."

Why not just sell outright to a strategic investor? Again, that decision depends on the company and owner's needs and objectives. "You have to assess the risk and benefit of taking only part of your money off the table up front, and selling your remaining share of the business later versus selling the whole business all at once," says Seagroves. "Private equity financing can be quite flexible, for example for objectives related to succession planning or unique structures, preserving employment for key employees, and other issues. Such considerations may affect pricing, and must be part of up-front discussions and negotiations."

Preparation
Since a private equity group is essentially buying into a business, the company needs to prepare itself as carefully as if it were selling the business. Obtaining the highest price in the marketplace hinges on fundamentals such as strength of the company's financial position, the management team, business plan, customer base, and finding the right match. "You have to have financials that tell a story; a business infrastructure; a proven, capable management team; a business strategy; a growth approach; and specific objectives for the capital, such as whether it is going to provide some liquidity, but also growth," observes Seagroves.

Compatibility
To find the right match, mid-size business owners must first know what they are looking for, and then do some research to seek out the private equity firms that may be interested.

"The owner's decision to cash out and exit altogether as part of the financing arrangement or to receive some cash now but continue in a management role, and aim for a future payday should go hand-in-hand with the objectives of the private equity firms that are targeted," says Tuchman. "Are they looking for an initial platform investment, or an add-on investment in a company that already has its management team in place?"

Owners expecting to stay with the business need to understand the fund's planned ownership horizon, its ultimate exit plan for the business, and how that fits with the owner's post-deal vision. "The typical private equity ownership horizon is three-to-five years, although it may be shorter or longer depending on a variety of factors, not the least of which will be the availability of attractive exit opportunities during the ownership period," says Tuchman.

Tracy Lefteroff, San Jose-based global managing partner with PricewaterhouseCoopers' Private Equity and Venture Capital group has been involved in hundreds of private equity transactions over the last ten years. He observes that the businesses successful in obtaining funding tend to carefully manage the number of firms they approach, the information they provide, and the quality of their presentation.

"Don't over-shop your deal," says Lefteroff. "Instead, target your potential investors with an eye toward focusing on five or six, and work through that process before you shop it on a wide basis. Otherwise, some investors could perceive they risk a bidding war, or that the company is encountering problems in the fundraising process."

This is definitely not a time to save the best for last. When seeking a short list of potential investors, it is essential to research them. "Fund websites generally will tell you the areas they favor, and are most interested in," says Lefteroff. "You can observe this from the investments they have made in the past, and see if there are either complementary or competitive investments in your space. This could have the added benefit of enabling you to avoid sharing your executive summary with a firm that has a competitive investment, and could use your information to your disadvantage."

Value Proposition
Private equity investors look for the strong qualities of a successful business, including a competitive advantage in the marketplace, a diverse customer base and the typical elements of a solid business strategy. Prepare an executive summary so a potential investor can get the main focus of the investment, and key data that you want to provide, without getting bogged down with extensive pages of detail to digest.

"You need to be able to articulate your company's strengths and sustainable competitive advantage quickly, and how that translates into cash flow, because these funds are ordinarily looking at hundreds of deals," notes Seagroves.

"Many investors call this the 'elevator pitch'," Lefteroff says. "You've got to make your summary brief and compelling enough to be able to say it in an elevator ride and spark enough interest that they would want to take the discussion further."

Be prepared to back up your summary, as investors typically will expect to go through a comprehensive due diligence process. Tuchman explains: "Begin the exercise of putting together your management and financial presentations several months prior to entering into discussions with private equity firms. Watch for nonrecurring items that might distort your recent historical financial results or new business opportunities that have not yet been fully reflected in the financials, for example: restructuring charges, nonrecurring or non-cash write-offs, new customer wins or new contract terms with suppliers."

From an overall business and operational perspective, investors will essentially want to understand the following:

The market(s) in which your business operates
How your business fits into its market(s)
What your plans are for the future of the business
On the finance and accounting side, investors typically go through a due diligence exercise geared toward understanding future cash flow, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) and the working capital and capital expenditure requirements of the business.

"If you're going to go through this process, and especially with a private equity player, you need to invest the time and resources up-front, in preparation," says Tuchman. "Be ready to discuss the financial metrics of your business, such as cash flow and EBITDA, as well as working capital and capital expenditure requirements. Understand it well, and consider whether or not you need to adjust the financial presentation, to adequately convey the earnings and cash flow potential of your company. This is an area where your professional advisors will be critical."

Unless a majority investor is going to bring in its own management team, it will be focused on the strength of a target company's management team. "Majority investors want some members of the current management team in the deal, to make sure that they're as confident about it as the private equity group," observes Seagroves. "That's why you typically see them buying less than one hundred percent of a business, up-front. They want to be sure that management has the incentive to see that the business is worth as much as possible when it's ultimately time to jointly sell."

Seagroves notes, "To add to the premium a business commands, it will need clean books and its information linked together into an articulate presentation. It will also require a business plan that includes additional growth opportunities even acquisitions to further tweak the interest of private equity investors, who are going to be looking at how to leverage the target company and make it grow."

Evaluating Offers
When in a position to evaluate offers, next steps include:

Weigh the Risks and Issues Around the Bids Received—Are there financing conditions? How comfortable are you that the deal can be financed at the leverage level the group is proposing? How is that leverage going to affect your business going forward and your ability to achieve your carry goals? Will it be over-leveraged?
Compare Apples to Apples When You're Looking at the Economic Risks and Return of Each Bid—"It's important to understand the non-economic issues around the structure of a deal, such as how much is to be put into escrow, and what the earnout is going to be," Seagroves explains. "A lot of private equity groups will use creative structures including earnouts and convertible preferred investments; some use clawbacks and guaranteed return instruments."
Sort Out All the Important Issues Around Employees, Legacy, Operating Approach, and Chemistry with Equity Investors Early in the Process—"If you want your management team to be part of the future, that needs to be articulated at the outset, for consideration by the private equity group," says Seagroves. "But, you must understand there is a cost of special issues to the seller. If your issues weaken the management team, or if for some reason the private equity group thinks they're being constrained, they're going to offer less."
Understand that the Majority Shareholder You Select is Going to be Your Boss—When the economics are equal, be sure to select the private equity group with which you have the better chemistry, the one that's going to know your industry, or can add some value, as opposed to financial engineering alone. "Private equity is like a marriage," says Seagroves. "It's easier to solve problems with a partner if you have good chemistry-and it tends to work a lot better if you address major issues before you seal the deal."
This article was written by Janice K. Mandel and originally appeared in Growing Your Business, a publication of the Private Company Services' practice of PricewaterhouseCoopers.

Google Local Can Help You Gain Marketshare in Your Business Today

2009-06-24T17:00:00.001-04:00

When people search for the speciality that your business represents, do you show up in Google? Have you tried Googling either products that you sell or services that you offer lately? Did you show up on the front page of local search within Google? If not, you won't want to miss this tip.
We all know that everyone has heard of Google, so where does your business rank? It's a question you must ask yourself. It's important that you rank in Google in order to gain marketshare in the business that you represent.

We all know that search engine optimization is important, especially today when we as businesses are looking for all of the no-cost and low-cost marketing tips that are available. It often takes search engine companies 3 to 6 months to even gain rankings in search engines such as Google, but I'm going to show you how you can get listed in Google on the front page of a search within your local region for your product or service just by following five easy steps, that really don't require any technical knowledge or know-how.

Steps to Gaining Prime Search Engine Results in Google

Step 1. Visit Google Local online. Click the link on the left hand side of the browser window that says "Put your business on Google Maps."
Step 2. Enter the appropriate information for your business including search tags. Your search tags are what prospective customers would look for when searching for information about your product or service online.
Step 3. Once you've entered all of the information necessary and required by the online form, review and click submit.
Step 4. You will be asked to verify your information. You can do this either by postcard or telephone, chose the option that works best for you. Telephone verification tends to expedite the process.
Step 5. Once you've confirmed either by telephone or postcard you will want to frequently check back for your listing within local search results of the search tags you selected. Google suggests checking back within 7 to 10 days, my results showed up within hours.

By following the steps above you have started on the necessary path of marketing your business online and utilizing a no cost tip that will help you come up in the search engine results of your prospective customer and clients; enjoy the rewards of targeted search engine traffic.

Delegate, Don't Just Dump

2009-06-24T13:50:00.002-04:00

Most managers don't know how to delegate. That's not really surprising, because no one ever delegated anything to them. How else are they going to learn?Many times, managers dump their work onto someone else, but there is a big difference between delegating and dumping. When you delegate something to a subordinate it should serve two purposes.

First, it must lighten your load so you can concentrate on more important issues.
Second, it must help the receiver learn and grow.

When you delegate, as opposed to dumping, you give the other person the same authority to complete the task as if you had done it yourself. If the task means signing a requisition, the person to whom you delegated the task must have the same authority to sign that requisition as you have. That doesn't mean you delegate all your authority to that individual, only that you have to give them the authority to do what you would have been able to do. For instance, if you can sign requisitions up to $10,000 and the delegated task means signing a requisition for $2,000, the person to whom you delegated must be able to sign that $2,000 requisition, but not necessarily one for $3,000.

Remember, though, that you can delegate the authority, but you cannot delegate the responsibility. It is up to you to see that the person is adequately trained before you delegate to them and is adequately supervised after you delegate. They won't necessarily do it the same way you would have, and they probably won't do it as well to begin with. That doesn't matter. Keep them from making any major blunders as they get the feel of the task and you will have successfully delegated. You will have lightened your load and you will have helped one of your people develop further.

SAP Business All-in-One Overview

2009-05-25T00:52:00.000-04:00

The Balance Sheet

2009-05-21T13:32:00.000-04:00

One of the important statements in financial statement analysis is the balance sheet. The balance sheet shows your assets, what you own; your liabilities, what you owe; and your owner’s equity, yours and other investor’s investment in the small business firm. Below is a line by line discussion of the items on a sample balance sheet, which can be found at the end of the article.

Assets

Line 1 is the firm’s cash account. Small business firms must keep some cash on hand for day-to-day transactions. Business firms also need to keep cash on hand for emergencies and to take advantage of any bargains they might find in the marketplace.

Line 2, accounts receivable, represents what your credit customers owe you if your firm extends credit. Since the balance sheet is like a snapshot of a firm’s financial position at one point in time, the figure for accounts receivable and all the other accounts is accurate for the day on which this financial statement was developed.

The value of the firm’s inventory is stated on Line 3. Inventory is simply the products the firm has for sale. It can be valued using a number of different methods. Two commonly-used methods are called LIFO and FIFO.

The last asset on the sample balance sheet is fixed assets. This asset is stated on Line 4. Fixed assets include any equipment and vehicles you own and any land and buildings you own. Fixed assets normally refer to the large and highly valued assets that are owned by your business firm and those that can be depreciated over time.

The value of the asset accounts is totaled and stated on Line 5. Total assets are the value of everything your firm owns. In this example, that amount is $820,000.

Liabilities and Equity

Liabilities are the debt your firm owes to its creditors. Line 6 lists accounts payable. Accounts payable are the short-term credit accounts that you owe your suppliers. Line 7 shows any long-term bank loans or loans from other sources that you’ve taken out with a maturity of more than a year. You may have had to use long-term loans in order to keep your firm solvent.

Line 8 shows the amount of owner’s capital that has been invested in the firm. This is the money that the owner and any other investors have put in the firm.

The last line, line 9, totals the amount of liabilities and equity. This is the total amount the firm owes plus the owners’ investment in the firm. The total of the liabilities and equity must equal total assets as the firm can’t own more than it owes.

Balance Sheet

XYZ Company Balance Sheet
December 31,2009
Assets
1.Cash	$ 40,000
2.Accts Rec	200,000
3.Inventory	180,000
4.Fixed Assets	400,000
5.Total Assets	820,000
Liabilities and Equity
6.Accts Payable	$ 180,000
7.LT Bank Loans	240,000
8.Owner's Capital	400,000
9.Total Liab & Equity	820,000

Financial Statement Analysis for Your Small Business Firm

2009-04-14T15:31:00.000-04:00

Without analyzing financial data from your small business firm, you, as the owner, would be flying blind. Even if the financial end of things is not your favorite part of your business and you intend to outsource as much of it as possible, you still have to understand it. Why? Because you have to understand the output you receive from your accountant or other financial professional in order to operate your business. For example, if your accountant tells you that your profit is $1,000 for the year, you must understand what went into allowing you to make that $1,000. You may not have to know as many details as the accountant, but you certainly have to understand the big picture.

Learning the Basics

It’s best to start with the basics in order to understand your financial position. Maybe you’ve been schooled in finance and accounting and, if so, consider this a review. If not, then here we go on a short course in understanding and analyzing your financial position.

The first thing you have to get up to speed on is the financial statements that you or your financial professional will generate for your business firm. These financial statements will help you determine your firm’s financial position at a point in time and over a period of time as well as your cash position at any point in time. Many small businesses fail because the owner loses a grip on the firm’s financial position. If you understand financial statements, that won’t happen to you.

The Income Statement

The income statement is also called the profit and loss statement. It is the major statement for measuring your firm’s profitability over a period of time. You develop the income statement in a step-by-step process starting with the amount of revenue you have earned. Then you subtract each item your firm has expensed to see what your profit or loss is after each is deducted. You can prepare income statements for a short period of time like a month, if you need that type of information. For tax purposes, you can extend that out and develop your income statement for the tax year.

The Balance Sheet

The balance sheet is a statement showing what you own (assets) and what you owe (liabilities and equity). Your assets must equal your liabilities (debt) plus your equity (owner’s investment). You have used your liabilities and equity to purchase your assets. The balance sheet shows your firm’s financial position with regard to assets and liabilities/equity at a point in time.

Statement of Cash Flows

Even if your company is turning a profit, it may be falling short because you don’t have adequate cash flow. It is just as important to prepare a Statement of Cash Flows as it is to prepare the income statement and balance sheet. This statement compares two time periods of financial data and shows how cash has changed in the revenue, expense, asset, liability, and equity accounts during those time periods. The statement divides the cash flows into operating cash flows, investment cash flows, and financing cash flows. The final result is the net change in cash flows for a particular time period and gives the owner a very comprehensive picture of the cash position of the firm.

Financial Analysis

2009-03-19T16:57:00.000-04:00

Developing Your Marketing Mix

2009-03-04T17:04:00.000-05:00

Your marketing mix is a combination of marketing tools that are used to satisfy customers and company objectives. Consumers often call the marketing mix "the offering." Your offer is controlled by the following variables often referred to as the four Ps in marketing:

Product
Price
Place (Distribution)
Promotion

By using variations of these four components you have the ability to reach multiple consumers within your target market.

Creating a successful marketing mix that will increase results often takes experimenting and market research. There are many methods that can be used, both in person and the use of impersonal presentations. The key is to not always depend on "one" mix always explore other avenues. The combining and coordination of these elements will be more effective than depending on one.

You must coordinate all elements so that the prospective consumer is not being sent mixed messages that can cause confusion. Do all of your elements contain the same message? Take for example the following scenario:

We are a company that specializes in marketing services and we cater to physicians, however the products we offer fulfill the needs of lead generation for lawyers. Our price is geared an enterprise budget and our magazine advertisements and promotions are being placed in magazines that have a subscription base of senior citizens.

Do you see a problem with this? While in this scenario it is very obvious, I guarantee that by looking at your marketing mix you may find discrepancies that surprise you. Always make sure that your marketing mix has a message that speaks in unison.

For instance make sure that if you have a practice that caters to a niche market that your product is geared towards the need of that market, your price is within the budget of that market, you are distribution your product or service where it will be seen by that market, and gear your promotion to solve the problems that they are encountering.

If you remember one thing from this article it is that one of the main keys to the success of any marketing program is the ability to work effectively in shaping marketing mixes that meet the nature and needs of your specified target market.

Selling Shares of Your Business

2009-02-12T13:08:00.000-05:00

People sell shares of a company to raise funds or to eventually sell the company. Shares can be sold to angel investors, venture capitalists, individuals, and other businesses. These different types of buyers will have different motives for buying, expectations of the dividends they may receive, and intentions for selling the shares later.

What You Need to Know
What are shares?
Shares in a company represent a proportion of the ownership of that company. Initially, shares are exchanged for cash and that cash, called equity capital or share capital, is then available to the business. Shares can be sold by the owner of a company, who must follow regulations governing the sale.

Can a company sell shares at any time?
Companies set an initial authorized amount of share capital—the total number of shares the company is permitted to sell. The authorized share capital can be raised at any time by the shareholders, and the company can then sell the additional shares. Many companies include a “pre-emption” clause in their articles of incorporation requiring that any additional shares are first offered to existing shareholders before being offered to other potential new investors.

What are the different types of shares?
The main, voting shares are known as ordinary shares or common stock. Companies also often create preference shares or preferred stock in order to raise equity capital. In the event of a company being dissolved, the preferred shares are considered for repayment before the ordinary shares.

Preferred shares usually attract a fixed dividend (provided, of course, there is enough profit to cover the dividend). Sometimes these shares are cumulative—if the dividend is missed one year, it is carried forward until such time as there is sufficient profit to pay it. Dividends on common shares cannot be paid until the dividend on the preferred shares is paid.

Preferred shares are usually redeemable, meaning that the company can buy them back and cancel them if it so desires. Usually they are repaid at par (that is, for the amount for which they were bought), but the repayment amount can be varied. The values for redemption are normally set out in the company’s articles of incorporation.

What is internal rate of return?
The financial benefit of owning shares does not come solely from dividends, but also includes the return achieved when the shares are eventually sold. The total rate of return, from income and capital growth, on an annualized basis, is known as the internal rate of return.

What is private equity?
Private equity is simply the term used for finance from a venture capitalist, seed fund, or angel investor in exchange for a share of the business.

What is an exit route?
The term “exit route” is used to describe the way that an angel investor or venture capitalist exits from an investment. In general, there are just three routes: initial public offering, buy back of shares by the founders of the business, or a trade sale. In practice, early investors may also exit by selling shares to a bigger investor. For example, an angel investor might exit when a venture capitalist decides to invest and provides an exit route for the angel investor by buying his or her shares.

What is an IPO?
An initial public offering (IPO) is the term used if you sell shares to the public through a stock exchange, such as New York Stock Exchange (NYSE) or the American Stock Exchange (AMEX).

What to Do
If You Are Selling the Business…
In order to sell your business by selling most or all of its shares, you need to first make sure that all of your accounts and records are up-to-date and that you are prepared to spend time locating and working with prospective purchasers. If your objective is to sell your business, say, because you want to retire, or want the money to start a new venture, then in most cases it will be best to use a business broker, who will help you advertise the business and seek prospective buyers. Also mention your intentions to local accountants and business support organizations, as they may well have clients who would be interested in buying.

You may want to stay active in the business, or buyers may wish you to stay, at least for a period of time. Some buyers may want to structure a deal over two or even three fiscal years, which will improve their cash flow and maintain a period of stability and continuity in the business, but may also help your tax position. Some buyers may want an earnout, whereby at least part of the price is dependent on future profit levels—so it is important to be realistic about future prospects when you talk to buyer prospects.

If You Want to Raise Equity for Investment…
If your objective is to raise money to reinvest in the business, first consider what makes the business attractive to an equity investor. Do you have proprietary intellectual capital? Potential for high returns? Is there an attractive exit route for investors? Perhaps most important of all, do you have the management team in place to make it all happen?

If the answer to these questions is yes, then you need to prepare a detailed business plan setting out the business’s prospects for the next three to five years. This plan will become your presentation to prospective share purchasers. To find such people, discuss your interests with your advisors, local business organizations, and any other parties who may be able to connect you with angel investors and venture capitalists. Remember, though, that once you identify these prospects, in addition to conveying your business plan, you will need to demonstrate that you have the determination and commitment to make the plan succeed.

What to Avoid
You Exaggerate the Figures
Exaggerating past performance or future business prospects when you talk to share purchasers will come back to haunt you. At the same time, you can explain to purchasers the value of the “sweat equity” that you have put in the company.

You Don’t Take Enough Time Preparing Your Proposals
Venture capitalists receive hundreds of business plans for every one in which they invest—so you need to work hard to capture their attention and persuade them that your business should be the one to receive their investment. Your proposal must include a solid business case for investment, but it must also convey enough uniqueness and energy to capture attention.

You Expect Too Much Too Soon
When planning to sell shares in your business, be realistic about the potential interest among investors, and plan accordingly for how long it will take you to identify investors and develop successful relationships with them.

Introduction to Managerial Accounting

2009-01-24T16:54:00.000-05:00