Global Edge International Consulting Associates, Inc.

There's No "Cash In A Flash" - Don't Be Desperate!

2015-12-05T14:36:00.000-05:00

In the search for capital and financing, desperation and a lack of a realistic time frame, some sustenance funds and a healthy perspective are absolutely poisonous!

Perhaps the worst mistake that entrepreneurs, project leaders, innovators and executives make is when they approach financial sources or established management consultancies with desperate demands for "cash immediately," accompanied by such desperate pleadings as "we need this money yesterday!" or "we'll lose this opportunity if we don't receive funds within x period of time!"

Sources of capital as well as management consultancies (at least the responsible ones) are not in business to bail out companies and clients. They are in business to help solve business problems within an appropriate time frame, and to help clients achieve realistic and reasonable objectives. The more desperate that you appear, the less likely it is that you will attract either quality consulting or an infusion of capital.

Don't forget that providers of capital and consultancies are in business to make profits and to generate fee income. They do not generally want to salvage other people's wrecks, if the situation requires lightning speed, desperate need, cash-in-a-flash, and there is insufficient capital available to conduct a due diligence review and to properly process a request for a capitalist intervention.

If a capital source or a consultancy is overly responsive to your desperate entreaties for money in a hurry, they are likely not seriously interested; setting you up for a "fee gouge"; or just simply incompetent. Any firm which does not require some serious due diligence before it will entertain your request is engaging in a questionable practice.

If you are searching for capital, be prepared to endure for a reasonable due diligence period, be prepared to pay some fees for professional engagement and/or due diligence, and never speak of desperation or pressure. Imposing your desperation or pressure on a capital source or a consultancy will generally cause them to turn you away.

Ironically, and lamentably, getting capitalized (especially when being represented by a qualified management consultancy as your advocate and negotiator) requires that you have some of your own capital to sustain your business and to pay fees, and that you have adequate time to allow for the capitalization process.

Thank you, as always, for reading me.

Douglas Castle for Global Edge International Consulting Associates, Inc. and The Global Edge International Blog

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EXIM Bank Is Back In Business

2015-12-04T20:58:00.000-05:00

EXIM Bank Is Back In Business.

The following is excerpted from a press release issued by the Export-Import Bank Of The United States (“EXIM”). This is indeed excellent news for private-sector businesses which currently export or which are desirous of exporting through programs such as Global Edge International Consulting Associates, Inc.'s Virtual Export Division Program. The reauthorization of EXIM is indeed a victory for small businesses and for the U.S. economy-at-large:

Media Contact: Lawton King (202-565-3200)
For Immediate Release: Friday, December 4, 2015

EXIM Bank Reauthorization Letter to Customers and Stakeholders

Washington, D.C. – Below is the letter Fred Hochberg, the chairman and president of the Export-Import Bank of the U.S. (EXIM Bank), sent to EXIM Bank customers and stakeholders today to announce the Bank’s reauthorization.

December 4, 2015

To Customers and Stakeholders of the Export-Import Bank of the United States:
I’m pleased to report that after overwhelmingly bipartisan votes in both the Senate and the House of Representatives, President Obama signed EXIM Bank’s reauthorization into law today.
Beginning today, EXIM will be able to restart the work needed to meet its mission of supporting American jobs and equipping American businesses with the tools necessary to compete for global sales. Importantly, the Bank secured a long-term reauthorization that will be in effect until September 30, 2019.
Exporters and their supply chains are critical to the country’s economic health. Export focused businesses bring a host of benefits to their communities and local economies, including generally paying higher wages to their employees than non-export businesses.
All of us at EXIM are ready to receive applications for new transactions. Given the expected volume, the efforts required to get our processes back up and running, and the need to apply our comprehensive due diligence requirements to every transaction, we are asking customers and other EXIM stakeholders to be patient while we resume authorized activities. We expect online application systems and exim.gov to be fully operational no later than Tuesday, December 8, and customers can always reach us at 1-800-565-EXIM.
In addition, while we are accepting and processing applications for all levels of financing, please keep in mind that all transactions totaling more than $10 million dollars require approval by EXIM’s Board of Directors. Those transactions will need to await Senate confirmation of members sufficient to reconstitute a quorum.
The EXIM team is as dedicated as ever to America’s exporters, empowering them to tackle new markets, and providing a level playing field in a fiercely competitive global economy. We look forward to serving you, taxpayers and the American people for years to come.
Best,
Fred P. Hochberg
Chairman and President of the Export-Import Bank of the United States
ABOUT EXIM BANK:
EXIM Bank is an independent federal agency that supports and maintains U.S. jobs by filling gaps in private export financing at no cost to American taxpayers. The Bank provides a variety of financing mechanisms, including working capital guarantees and export credit insurance, to promote the sale of U.S. goods and services abroad. Almost ninety percent of its transactions directly serve American small businesses.
In fiscal year 2015, EXIM Bank approved $12.5 billion in total authorizations. These authorizations supported an estimated $17.7 billion in U.S. export sales, as well as approximately 109,000 American jobs in communities across the country.

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To find out more about how your company can tap into the ever-expanding global economy, please visit our website at http://GlobalEdgeInternational.com . Our blog, with its featured articles, can be viewed at http://GlobalEdgeInternational.blogspot.com .

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IMF's Acceptance Of The Chinese Renminbi (Yuan): Implications

2015-11-30T18:04:00.003-05:00

IMF's Acceptance Of The Chinese Renminbi (Yuan): Implications

The following material was derived from an article which appeared in The New York Times, today, November 30, 2015, and which was subsequently posted in Yahoo News. The implications, both short-term and in the longer-term are far-reaching and may produce increased pressure against the U.S. Dollar in the global Marketplace. It stands to benefit China in terms of international trade and capital markets, while having a potentially negative effect on the U.S. Currency's valuation and the U.S.' ability to compete in the global marketplace. Links to each of the two articles follow below:

http://www.nytimes.com/2015/12/01/business/international/china-renminbi-reserve-currency.html

http://news.yahoo.com/imf-approves-chinas-yuan-elite-currency-171229011--finance.html

In its simplest form, the renminbi, will now be join the USD and other long-standing preferred reserve currencies as a new preferred reserve currency and as a member of the market basket of currencies that comprise SDRs (Special Drawing Rights), which are the surrogate currency which the central banks of the world use to settle interbank debts through the IMF (International Monetary Fund). Possible implications are listed below for your review and evaluation:

=+ A percentage of the world's banks will now hold renminbi instead of dollars in their reserve portfolio. This will place a downward pressure on the USD just based upon the law of supply and demand;

=+ An increasing number of international transactions will now be denominated in renminbi in lieu of USD;

=+ There will be a strengthening of the renminbi and a weakening of the USD;

=+ China's position as an exporter (driven largely by its pricing advantages) will be somewhat more challenged, while the U.S.' potential as an exporter will be strengthened due to a “cheaper” currency;

=+ There may be an influx of USD back into the U.S. Which may be perceived by the Fed as being inflationary, which will put pressure on the Fed to increase domestic interest rates;

=+ The U.S securities markets will be adversely affected;

=+ The Chinese securities markets will be favorably impacted;

=+ U.S. Banks may risk slight credit downgrades;

=+ Chinese banks will experience increased credit stability.

In sum, the longer-term effect of this move by the IMF will cause some additional economic hardship for the U.S.

Thank you for reading the The Internationalist Page Blog and The Global Edge International Consulting Associates Blog

Douglas Castle

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8 Technologies Will Dominate The Near-Term Future

2015-11-29T20:28:00.000-05:00

EIGHT TECHNOLOGIES WILL SHAPE THE NEAR-TERM FUTURE

According to an IBM-led study of C-Suite executives, these are the technological foci (focuses) which will shape the near-term (3-5 years) future. While C-Suite executives tend to be fadists more than Global Futurists, the power of the effect of their self-fulfilling prophesy must be given its due. It might be a good exercise to at least understand the aspects and implications of each of these innovative areas before we judge the C-Suite denizens too harshly.

Cloud Computing And Related Services:

Cloud computing, also known as on-demand computing, is a kind of internet-based computing, where shared resources and information are provided to computers and other devices on-demand. It is a model for enabling ubiquitous, on-demand access to a shared pool of configurable computing resources.

Cloud computing and storage solutions provide users and enterprises with various capabilities to store and process their data in third-party data centers. It relies on sharing of resources to achieve coherence and economies of scale, similar to a utility (like the electricity grid) over a network. At the foundation of cloud computing is the broader concept of converged infrastructure and shared services.

Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications and services) that can be rapidly provisioned and released with minimal management effort.

Cloud computing, or in simpler shorthand just "the cloud", also focuses on maximizing the effectiveness of the shared resources. Cloud resources are usually not only shared by multiple users but are also dynamically reallocated per demand. This can work for allocating resources to users. For example, a cloud computer facility that serves European users during European business hours with a specific application (e.g., email) may reallocate the same resources to serve North American users during North America's business hours with a different application (e.g., a web server). This approach helps maximize the use of computing power while reducing the overall cost of resources by using less power, air conditioning, rack space, etc. to maintain the system. With cloud computing, multiple users can access a single server to retrieve and update their data without purchasing licenses for different applications.

Mobile Solutions:

Definition

Mobile solutions refer to the online services that are made available to users while they are on the go. Mobile solutions technology has not only traversed geographical boundaries but has also accessed various domains. Providers of the technology continue to provide services in many different countries through by making use of the many developments in mobile technology. Today, this technology continues to give services in tune to today’s urban mobility needs.

Components

The first component is wireless data networks. This refers to an electronic communications process that allows the orderly transmitting and receiving of data through the use of a wireless network of computers. The next component is wireless data modems. These are devices that allow computers to connect to a wireless local area network (WLAN) without wires or cabling for transmitting and receiving data. Devices need this in order to connect to networks. The third component is mobile computers. These are devices that are wireless ready. These can be easily connected to wireless modems and run wireless enabled applications. These include laptops and notebook computers, handheld computers, palm-sized computers and many more. Next is wireless middleware. Middleware is defined as software that connects different parts of an application or a series of applications. The last component is wireless-enabled applications. These refer to programs and other software that can be readily used once connected to a network.

Functionality and General Uses

There are many mobile solutions providers all over the world. Each provider strives to set itself apart from the other providers by boosting its competitive advantage through differentiation, lower costs and the formation of alliances with leading companies.

Mobile solutions providers have an array of services. Some providers focus purely on payment solutions. Some providers offer an electronic wallet feature that allows businesses to make or accept payments, accept international and local credit card payments and industry specific payments using only their mobile phone. There are also providers that offer online hotel reservations with a deposit, ticketing solutions for events and events organizers, mobile banking and other electronic payment services.

Some providers offer mobile solutions for personal use. Some make use of services such as information alerts and notifications, travel updates, news alerts, sports updates and horoscopes. Other mobile solutions providers have brought the chat services to a whole new level through personal chat, dating and personal consultations. Some providers generate great profit by providing entertainment to their clients through quizzes and games, jokes and cartoons, videos with the use of mobile phones with 3G.

Some providers focus on mobile solutions for providing corporate or business use through file storage, file sharing and mobile e-mailing system. Some companies involved in direct selling also make use of short message service or SMS to allow their customers to check availability of stocks, updates on products, check distribution address and other details for their business. The most common use of mobile solutions technology today is for direct marketing. Companies are able to utilize mobile solutions for their promos and contests and brand advertisements. They are able to advertise their products and services through SMS. Because of the popularity of SMS all over the globe, most companies make use of this as their medium in their promotions.

The Internet Of Things (IoT):

The Internet of Things (IoT) is an environment in which objects, animals or people are provided with unique identifiers and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction. IoT has evolved from the convergence of wireless technologies, micro-electromechanical systems (MEMS) and the Internet. The concept may also be referred to as the Internet of Everything.

The Internet of Things (IoT) is the network of physical objects or "things" embedded with electronics, software, sensors, and network connectivity, which enables these objects to collect and exchange data. The Internet of Things allows objects to be sensed and controlled remotely across existing network infrastructure, creating opportunities for more direct integration between the physical world and computer-based systems, and resulting in improved efficiency, accuracy and economic benefit. Each thing is uniquely identifiable through its embedded computing system but is able to interoperate within the existing Internet infrastructure. Experts estimate that the IoT will consist of almost 50 billion objects by 2020.

British entrepreneur Kevin Ashton first coined the term in 1999 while working at the Auto-ID Labs (originally called Auto-ID centers - referring to a global network of RFID connected objects). Typically, IoT is expected to offer advanced connectivity of devices, systems, and services that goes beyond machine-to-machine communications (M2M) and covers a variety of protocols, domains, and applications. The interconnection of these embedded devices (including smart objects), is expected to usher in automation in nearly all fields, while also enabling advanced applications like a Smart Grid, and expanding to the areas such as smart cities.

"Things," in the IoT sense, can refer to a wide variety of devices such as heart monitoring implants, biochip transponders on farm animals, electric clams in coastal waters, automobiles with built-in sensors, or field operation devices that assist firefighters in search and rescue operations. These devices collect useful data with the help of various existing technologies and then autonomously flow the data between other devices. Current market examples include smart thermostat systems and washer/dryers that use Wi-Fi for remote monitoring.

Besides the plethora of new application areas for Internet connected automation to expand into, IoT is also expected to generate large amounts of data from diverse locations that is aggregated very quickly, thereby increasing the need to better index, store and process such data.

Cognitive Computing:

Cognitive computing is the simulation of human thought processes in a computerized model.
Cognitive computing involves self-learning systems that use data mining, pattern recognition and natural language processing to mimic the way the human brain works. The goal of cognitive computing is to create automated IT systems that are capable of solving problems without requiring human assistance.

Cognitive computing systems use machine learning algorithms. Such systems continually acquire knowledge from the data fed into them by mining data for information. The systems refine the way they look for patterns and as well as the way they process data so they become capable of anticipating new problems and modeling possible solutions.

Cognitive computing is used in numerous artificial intelligence (AI) applications, including expert systems, natural language programming, neural networks, robotics and virtual reality. The term cognitive computing is closely associated with IBM’s cognitive computer system, Watson.

Cognitive computing (CC) makes a new class of problems computable. It addresses complex situations that are characterized by ambiguity and uncertainty; in other words it handles human kinds of problems. In these dynamic, information-rich, and shifting situations, data tends to change frequently, and it is often conflicting. The goals of users evolve as they learn more and redefine their objectives. To respond to the fluid nature of users’ understanding of their problems, the cognitive computing system offers a synthesis not just of information sources but of influences, contexts, and insights. To do this, systems often need to weigh conflicting evidence and suggest an answer that is “best” rather than “right”.

Cognitive computing systems make context computable. They identify and extract context features such as hour, location, task, history or profile to present an information set that is appropriate for an individual or for a dependent application engaged in a specific process at a specific time and place. They provide machine-aided serendipity by wading through massive collections of diverse information to find patterns and then apply those patterns to respond to the needs of the moment.

Cognitive computing systems redefine the nature of the relationship between people and their increasingly pervasive digital environment. They may play the role of assistant or coach for the user, and they may act virtually autonomously in many problem-solving situations. The boundaries of the processes and domains these systems will affect are still elastic and emergent. Their output may be prescriptive, suggestive, instructive, or simply entertaining.

Advanced Manufacturing Technologies:

Advanced manufacturing technology is defined as computer-controlled or micro-electronics-based equipment used in the design, manufacture or handling of a product.
Typical applications include computer-aided design (CAD), computer- aided engineering (CAE), flexible machining centres, robots, automated guided vehicles, and automated storage and retrieval systems. These may be linked by communications systems (factory local area networks) into integrated flexible manufacturing systems (FMS) and ultimately into an overall automated factory or computer-integrated manufacturing system (CIM).

New Energy Sources And Systems:

There are the variations on the fossil fuel formulations and then there are the “alternative” energy sources which either minimize or negate any carbon footprint and are ecologically more desirable.

The variations on the fossil fuel formulations include more extensive offshore drilling and fracking, which is the process of drilling down into the earth before a high-pressure water mixture is directed at the rock to release the gas inside. Water, sand and chemicals are injected into the rock at high pressure which allows the gas to flow out to the head of the well. Both drilling and fracking have their share of pro-environmental opponents, perhaps with valid reason.

Everyday, the world produces carbon dioxide that is released to the earth’s atmosphere and which will still be there in one hundred years time.

This increased content of Carbon Dioxide increases the warmth of our planet and is believed by many to be the main cause of the so-called “Global Warming Effect”. One answer to global warming is to replace and retrofit current technologies with alternatives that have comparable or better performance, but do not emit carbon dioxide. This is generally referred to as alternate energy.

By 2050, one-third of the world's energy will need to come from solar, wind, and other renewable resources. Who says this? British Petroleum and Royal Dutch Shell, two of the world's largest oil companies, do. Climate change, population growth, and fossil fuel depletion mean that renewables will need to play a bigger role in the future than they do today.

Alternative energy refers to energy sources that have no undesired consequences such for example fossil fuels or nuclear energy. Alternative energy sources are renewable and are thought to be "free" energy sources. They all have lower carbon emissions, compared to conventional energy sources. These include Biomass Energy, Wind Energy, Solar Energy, Geothermal Energy, Hydroelectric Energy sources. Combined with the use of recycling, the use of clean alternative energies such as the home use of solar power systems will help ensure Humankind's survival into the 21st century and beyond.

Bioengineering:

Bioengineering is the application of the life sciences, physical sciences, mathematics and engineering principles to define and solve problems in biology, medicine, health care and other fields.

Bioengineering is a relatively new discipline that combines many aspects of traditional engineering fields such as chemical, electrical and mechanical engineering. Examples of bioengineering include:

artificial hips, knees and other joints
ultrasound, MRI and other medical imaging techniques
using engineered organisms for chemical and pharmaceutical manufacturing

This vast field of integrating or developing mechanical, electrical or design skills to either perform work on, or to become integrated with physiology, also subsumes aspects of stem cell research, the Human Genome Project, cloning and biometrics. These are all terms worth being familiar with, as they will become more and more prominent in the practice of medicine and life sciences in general, and due to the high likelihood of an increasing number of very large companies (conglomerates) who will be investing increasing sums into the research and development of biomedical engineering.

Man-Machine Hybrids [Does Anyone Remember “Robocop”?]:

Yes, indeed... remotely man-operated drones may be considered a crude example of man-machine hybrids (more likely they are man-machine partnerships), but Futurist and scientist Ray Kurzweil has a fascinating view of what true-man-machine hybrids are and will be, and what their potential might be.

Human brains will be boosted with artificial intelligence at some point after the year 2030, one of the foremost thinkers on Artificial Intelligence has said.
The brain will connect to online Artificial Intelligence to become a “hybrid of biological and non-biological thinking”, Ray Kurzweil, director of engineering at Google, suggested.

Tiny “nanobots” made from DNA strands would connect our brains to the internet, allowing us to augment our own intelligence with artificial intelligence, he said.

Professor Stephen Hawking, noted physicist, mathematician, cosmologist and Futurist has expressed fear that Artificial Intelligence might eventually be the undoing of our species and lead to our ultimate demise as a species.

This subject has considerable overlap with biomechanical and biomedical engineering, except that in these last two fields of endeavor, the physical body is integrated with robotic or artificial parts or enhancements, without a change in the basic operation of the Human mind. In Kurzweil's view of the future, the mind will be an amalgam of native Human (organic) thought and neurological capabilities with computer intelligence, storage, pattern recognition and enhanced learning and retention capabilities.

The take-away from all of the foregoing information is not necessarily that each of the areas identified will be one of the “Next Big Things” within the coming three to five-year period; but it is a safe bet to assume (and we all know what happens when we count too much on assumptions) that each of the identified areas will be where C-Suite executives, in their capacities as decision makers, will be investing money and time. Carrying this a step further, The Global Futurist and Global Edge International Consulting Associates, Inc. would see that these anticipated expenditures of money, time and focus are actually leading indicators of the growth and dominance in business and society of these technologies. Being a bit conservative, one might think that these technologies will come to market dominance during the next five to seven-year period, allowing for this “lead indicator effect”.

As always, thank you for reading me.

Douglas Castle, for The Global Futurist, Global Edge International Consulting Associates, Inc. and The Global Edge International Blog

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NOTE: THE INFORMATION CONTAINED IN THIS ARTICLE SHOULD NOT BE CONSTRUED BY THE READER AS BEING LEGAL, FINANCIAL, TAX, ACCOUNTING, ECONOMIC OR INVESTMENT ADVICE. NO OFFERING OF SECURITIES OR OTHER INVESTMENT INTERESTS OF ANY TYPE IN ANY ENTITY IS MADE HEREBY, NOR IS A SOLICITATION FOR THE PURCHASE OF SECURITIES OR OTHER INVESTMENT INTERESTS OF ANY TYPE IN ANY ENTITY MADE HEREBY. THIS ARTICLE IS INTENDED FOR GENERAL INFORMATIONAL PURPOSES ONLY AND REPRESENTS THE VIEW OF THE AUTHOR ONLY.

THIS ARTICLE IS COPYRIGHT 2015 BY DOUGLAS E. CASTLE, WITH ALL RIGHTS RESERVED. ANY REPRODUCTION, TRANSMITTAL OR DISTRIBUTION OF THIS ARTICLE, EITHER IN WHOLE OR PART, IS UNAUTHORIZED AND MAY BE UNLAWFUL, UNLESS FULL ATTRIBUTION IS GIVEN TO THE AUTHOR AND ALL LINKS IN THE ARTICLE REMAIN INCLUDED AND “LIVE.”

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Sorry Has Become a Four-Letter Word

2015-11-11T16:19:00.001-05:00

“SORRY” Has Become A Four-Letter Word

Douglas Castle for Global Edge International Consulting Associates, Inc.

An profound and prolific apology after a colossal foul-up or political disaster has become an actual perfunctory insult to the offended or wronged parties. It sounds insincere, feels weak and needy, invites other questions (and other concessions) and makes you look foolish. In brief, it can kill or negotiations and actually sabotage your customer relationships. No one says this better than author and success coach, Oren Klaff of “Pitch Anything”. The idea is to just work right past the error or gaffe and move forward, selling more strongly than ever. The text that follows comes from a recent email sent to me by Oren [I've left all of the grammatical and syntax errors intact, for which I make no apologies]:

“Funny things pop out of my mouth from time to time. No preparation. No planning. It just happens.

For example, a few weeks ago during a presentation to a group of financial analysts I said, “Guys, I can’t sugar coat this for you ... I’m not #@%! WILLY WONKA.”
Although, I thought that was HILARIOUS at the time ... no one laughed. There was just some uncomfortable coughing and a few chairs shuffled.
My first reaction was to apologize, so my mind starting forming the words, “ ... uhh, sorry about that ..."
But my training kicked in, and I told myself: Keep moving forward, don’t explain yourself, do not act ‘needy’ or seek validation.
Ok, sure, I know that apologizing is necessary when we’ve clearly hurt someone else, violated a rule, or done something we know to be wrong. And saying sorry is a necessary step in some situations to repair the social fabric that keeps us connected to other people.
But in business, a gushing apology can be exactly the wrong move.
For example, WE ALL want to keep our clients happy, so it can be tempting to say “sorry” for things that get off track —
- but It’s important to recognize that apologizing unnecessarily can actually undercut your professionalism by displaying neediness and diminishing others’ confidence in you.
It reminds me of the other day when a CEO called and asked if he could see me. He had a serious problem, so we booked a meeting.
That’s how every week starts for me. Like an episode of SUITS, at 9am Monday, some kind of trouble walks through the door and I have 24 hours to save the client’s company or The Senior Partners Will Be Very Mad.
This client shuffled his way into my waiting room, downcast and dejected.
His shoulders slumped. He was in big trouble. When a guy looks like that, it’s either a woman problem or a money problem and given my track record, people usually don’t want my advice on women.
He told me what had happened at his company. His servers had crashed during a live event. Customers lost money.
“I have to go on the road and give my largest customers a personal apology,” he said, “or I’m going to lose a lot of business.”
“Tell me what you plan to say,” I said. ”Let me hear your pitch.”
And then came the El Niño of Bad Ideas:
He was going to apologize for a flaw that made the servers crash;
He was going to give discounts; and refunds.
And he planned to use the history of his relationship with the client, like Sal Tessio in The Godfather.
Sal Tessio: Can you get me off the hook, Tom? For old times' sake?
Tom Hagen: [shakes his head] Can't do it, Sally.
[Tom watches sadly as Sal is led to a waiting car]
Obviously, Sal was killed in that scene; as my client would get killed if he pleaded for forgiveness.
So, when he was done pouring his heart out, I poured him a cup of something strong and let him sip it slowly, preparing him for what I would say next:
There will be No Discounts. No Refunds. No Sob Story. “In fact,” I said, “you’re going to visit the customers, give them ONE quick and sincere ‘sorry’ and then upsell them to a higher level of service.”
His eyes opened wide.
I told him, when you highlight and dwell your own mistakes you trigger the Recency Effect — the tendency to blow things that have just happened out of proportion.
In the business world, apologies, explanations, not to mention sappy pleas for mercy do nothing but stir up emotions and anger. My client needed to focus on the future.
First, I told this this CEO to read my book, PITCH ANYTHING. On page 157 I show that offering discounts and acting needy will actually harm a business relationship more than it helps.
Look, even your toughest clients will agree, the past is a done deal. It’s gone. Dust. They will accept that now is the time to turn over the Etch-a-Sketch and give it shake, wipe the slate clean.
Why You Should Only Give a Single Brief Word of Sorry After a High-Profile Mistake
No matter how sincere, your mea culpas can come off sounding empty. Only by taking the right action can you repair your broken reputation.
Consider for a moment, what do Charlie Sheen, Anthony Weiner and Tiger Woods all have in common?
They all apologized right after a major personal crisis.
I believe, in the US, this type of apology has become so cliché, it's lost all its credibility, because In short, we don't buy post-crises apologies anymore.
Here’s my four-point plan for cleaning up after a any mistake:
1. Write a one-paragraph Big Idea nods to the mistake, but talks about the future. Then memorize it. Here’s an example:
Today’s servers are the most complex devices man has ever invented. They move terabytes of data in microseconds, and we humans have come to rely on them. Or perhaps the word is OVERRELY, for they are machines and they can fail. In fact, these failures are a right-of-passage for any fast growing company, letting them know, it’s time to upgrade, improve and invest in more infrastructure than ever before ...
2. No one expects you to be perfect. Accurately describe what new systems or procedures you're installing as soon as possible and sell the client that new level of service.
3. Pitch the client like you would a new account. Don’t count on their goodwill, just their desire to buy great service at a fair price from a good company. Give a CLEAR description your new improved level of service. If you need best pitch your industry has ever seen, jump over to Pitch Mastery, I’ll make sure you get it done.
4. Get professional help. If you find yourself in a “situation” where you’ve really messed up and first three steps above aren't enough to tamp-down the crisis, enlist the support of a credible third-party professional who knows how to build a script to handle this kind of situation. The president has a script writer, so do Fortune 500 CEO’s and franchise athletes ... you’re no less important and you should have one too.
Whatever you do, best not expect a gushing apology to work. We live in a jaded, cynical society that has had its fill of sketchy executives, politicians, celebrities and athletes. So truly, a modern crisis means never having to say you're sorry. It means MORE than that: fixing your act, communicating the fixes as they're done and then quickly reestablishing your reputation.
Don’t wait to learn how to handle yourself until you’re in a tight situation. If you haven’t already, buy PITCH ANYTHING now. And do sign up for a free trial of Pitch Mastery.
Forward this email to anyone you think might benefit from it, so they can get on our mailing list.
I have to run, another client just walked in the door, he’s wearing thick glasses and has a large computer. I’m not sure what the problem is here, but I'll bet it's hard to pronounce.
See you next week when I cover the right way to start of any presentation (things I learned the hard way).
-Oren
oren@pitchanything.com"

=> The Takeaway: Don't apologize unless you've truly hurt someone personally, lest you appear weak and incompetent. Take a lesson from the universally disliked (but desperately envied and admired) Donald Trump. Don't get caught in the quicksand of an apology. Don't make it into an issue. Don't spend time falling into the trap of back peddling.

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Douglas Castle for Global Edge International Consulting Associates, Inc. and The Global Edge International Blog

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Equity Crowdfunding Has Landed!

2015-11-01T16:34:00.000-05:00

Equity Crowdfunding Has Landed

Now Anyone Can Participate In StartUp IPOs.

Investment Bankers? Prepare To Be Disrupted And Displaced.

Promising New Companies Have A New, Easier, Cheaper Source Of Capital

By Douglas Castle for GEI Consulting and The Global Futurist Blog

NOTE: THE INFORMATION CONTAINED IN THIS ARTICLE SHOULD NOT BE CONSTRUED BY THE READER AS BEING LEGAL, FINANCIAL, TAX, ACCOUNTING, ECONOMIC OR INVESTMENT ADVICE. NO OFFERING OF SECURITIES OR OTHER INVESTMENT INTERESTS OF ANY TYPE IN ANY ENTITY IS MADE HEREBY, NOR IS A SOLICITATION FOR THE PURCHASE OF SECURITIES OR OTHER INVESTMENT INTERESTS OF ANY TYPE IN ANY ENTITY MADE HEREBY. THIS ARTICLE IS INTENDED FOR GENERAL INFORMATIONAL PURPOSES ONLY AND REPRESENTS THE VIEW OF THE AUTHOR ONLY.

THIS ARTICLE IS COPYRIGHT 2015 BY DOUGLAS E. CASTLE, WITH ALL RIGHTS RESERVED. ANY REPRODUCTION, TRANSMITTAL OR DISTRIBUTION OF THIS ARTICLE, EITHER IN WHOLE OR PART, IS UNAUTHORIZED AND MAY BE UNLAWFUL, UNLESS FULL ATTRIBUTION IS GIVEN TO THE AUTHOR AND ALL LINKS IN THE ARTICLE REMAIN INCLUDED AND “LIVE.”

The Securities & Exchange Commission (SEC) has now approved and promulgated (by publication) the Final Rules for Title III Equity Crowdfunding under the JOBS Act legislation. In a few months, any investor, regardless of income and net worth, will be able to participate in a startup company by purchasing shares or debt (bonds, etc.) and earning a return on investment in the form of capital gains, dividends or interest.

This is truly revolutionary in the world of crowdfunding, which has been dominated since its inception by rewards-based and donation-based funding approaches. These offerors, featuring their pavilions on such sites as Kickstarter, Indiegogo and GoFundMe, were not permitted to offer securities to participants. Now, that has all changed.

If a startup or entrepreneurial enterprise wants to raise money by selling its shares, bonds or notes to the public, it may now do so on one of any number of duly-licensed internet-based platforms, often referred to as “portals”. Equity crowdfunding will disrupt the traditional capital markets, and will eliminate much of the expensive and extensive compliance requirements associated with typical private placements (offerings to a limited number of investors pursuant to the terms of a private place confidential offering memorandum), and initial public offerings (sold by prospectus through investment banking and securities brokerage houses).

There are, of course, certain rules and restrictions on the amounts of such offerings, and on certain other aspects of raising money through securities offerings orchestrated through internet-based crowdfunding, which can be done by licensed and registered securities broker-dealers and a new class of less-restrictively regulated entities called “funding portals”. Some of these restrictions are highlighted briefly in an article in Fortune magazine:

http://fortune.com/2015/10/30/its-official-startups-can-soon-raise-money-from-your-grandma/

Another article which sheds some further light on this dramatic change in the possibilities for startups to raise operating capital through securities crowdfunding can be found in an article in Forbes magazine:

http://www.forbes.com/sites/chancebarnett/2015/10/30/sec-approves-title-iii-of-jobs-act-equity-crowdfunding-with-non-accredited/

The most comprehensive outline (merely a hint) of the newly adopted rules and restrictions is set forth in a press release put out by the SEC itself:

http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370540017677

A quick synopsis of some of the potential changes anticipated to trend through equity crowdfunding via investment bankers and portals follows:

=> There will likely be a decline in the percentage of entrepreneurial companies seeking funding in excess of $25,000.00 - $50,000.00 through the traditional rewards-based crowdfunding platforms, and a dramatic increase in the number of startups listing themselves on portals, especially those nascent enterprises and projects seeking capital of between $100,000.00 and $1,000,000.00;

=> There will be a decline in the percentage of total startups seeking money from venture capitalists, angel investor syndicates and private equity sources. These last three categories of capital sources will still be seeing their share of larger (i.e., in excess of $5,000,000.00) fundraising deal prospects, especially where disruptive technological innovations are valuable proprietary intellectual property are involved; and

=> Some entrepreneurial offerors will be “working,” “gaming” and otherwise testing ceilings on crowdfunding offering amount limitations by experimenting with offering units featuring layers of warrants, aggressive conversion features and other ingenious ways of working within the written legal framework of the regulations, while possibly pushing the intended regulatory envelopes. Some of these crowdfunding experimenters will be seen as pioneers and others as outlaws (naturally);

=> There will be an economic stimulus to the US economy through a variety of channels including an increase in private sector permanent jobs creation in the small business sector;

=> A goodly portion of the fees generated by traditional investment banking firms will be shifting over to the owners of licensed and registered portals. Investment banking will be significantly disrupted, especially in the IPO market, while portals will be inundated with both supply-side and demand-side business and the income which is ordinarily associated with underwriting.

As always, thank you for reading me,

Douglas Castle for Global Edge International Consulting Associates, Inc. and The Global Edge International Blog

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WHY WOULD CONGRESS KILL AMERICAN JOBS AT ELECTION TIME?

2015-10-21T17:11:00.000-04:00

WHY WOULD CONGRESS KILL AMERICAN JOBS AT ELECTION TIME?

A vote is scheduled to take place on the house floor in late October of this year. The proposed legislation, if passed, would forge a pathway for the reopening of the doors of the U.S. EXPORT-IMPORT BANK.

What is the U.S. EXPORT-IMPORT BANK you ask? The U.S. EXPORT-IMPORT BANK is a U.S. government agency that assists American Businesses in providing financial and other technical assistance to compete in global trade with an emphasis on exports of American goods to foreign countries. During the height of the depression, FDR pushed through the creation of an agency as part of his NEW DEAL strategy that was designed to assist small and medium sized American companies in their efforts to export goods, manufactured by American workers, to overseas customers. The U.S. EXPORT-IMPORT BANK was born. Over the next few years, and after some tinkering, the bank was retooled in 1945 and, up until July of 2015, was the one place American companies could access assistance in financing the manufacturing and sale of American exports when traditional sources of loans for production and credits for purchase of such goods were not available in the traditional banking arenas. Presidents throughout the years, from John F. Kennedy to Ronald Reagan, wholeheartedly supported this tool that was successful in making the international markets a "more even playing field" for American business. Just as important, the U.S. EXPORT-IMPORT BANK not only increased the bottom line of mid-American businesses, but permitted these work horses to maintain and hire American workers. If that were not enough, at the end of each year this modest agency, staffed by several hundred workers, actually returned a profit to Uncle Sam, last year writing the U.S. Treasury a check for approximately $1 billion dollars. So the question begs, what happened?

When a cabal of individuals with a net worth north of $100 billion dollars and a stable of corporations dominating the energy and manufacturing landscape of the U.S. decides to pursue its radical extremist political agenda, which involves the nixing of governmental involvement in American business, you have the emergence of a narcissistic brand of treason in the form of the Koch brothers. Whether playing the role of king maker for jihadist candidates of the marginal tea party or just settling old scores with mainstream GOP party leaders and detractors, Koch Industries and its "beard" known as "Americans for Prosperity", (the irony never escapes me), decided early in July of this year to flex their substantial political muscle and terminate, with extreme prejudice, the only champion of the spirit and essence of government/private sector cooperation, the U.S. EXPORT-IMPORT BANK. So why did they do it?

Well, the easy answer would be, "because they can." This would also be the correct answer. Although Koch industries and their wholly owned ventures were once benefactors of $16 million dollars of loans from the U.S. EXPORT-IMPORT BANK that they closed for business, these hypocrites have the audacity and money to demonstrate to the public that their influence does not end at controlling the direction of social issues in conservative America. They had to go one step further. By forcing their puppet legislators to fail to renew its charter, the Koch machine made good on their claim that their newly found political power extends to American industry and, does not, indeed, end at issues relating only to gay marriage and legislation designed to obstruct voter registration. It is a vulgar display of power at best, and at worst an exercise in its willingness to destroy smaller American businesses, which make up 90% of the customers at the U.S. EXPORT-IMPORT BANK, just to make a political point. The problem however, the great miscalculation made, was the Koch brothers’ inability to understand that in the process of this most Un-American activity, they neglected to factor in the destruction of American jobs and their failure to recognize that American workers vote, and they vote in big numbers, the unemployed in particular, those same trampled upon workers who live in districts represented by the Koch brothers’ puppet congressional representatives.

Knowing how to count votes is an essential skill in the American real politic. For example, the great state of Texas, with the direct involvement of the U.S. EXPORT-IMPORT BANK, (prior to the Koch brothers closing its doors), racked up $23 billion dollars in export sales of American goods made by American workers. The equally great state of California, with the direct assistance of the late U.S. EXPORT-IMPORT BANK, sold in the overseas export market a total of $13 billion dollars of American made goods, much of it generated in the agro-business and aerospace business, and much of those goods shipped out from the port of Long Beach, California. With the presidential election of 2016 now in full swing, both parties must stretch their collective memories to recall a time when a Republican nominated for President of the United States, was victorious without carrying the state of Texas. Of equal consideration, Democratic nominees for President must carry the great state of, yes, California to win the coveted seat in the White House. American workers displaced by the demise of the U.S. EXPORT-IMPORT BANK, those that produced a total of $36 billion dollars of American exports in Texas and California, will be lining up at the voting booth, not only in the 2015 congressional races, but more importantly in November of 2016 for the American Presidential election. This reality, whether or not factored in by the Koch machine, is now playing out as a new Speaker of the U.S. House of Representatives is sought to replace Speaker Boehner this fall.

Bakersfield, California Congressman Kevin McCarthy was given marching orders last July, by the Koch political colossus, to bolt the doors of the U.S. EXPORT-IMPORT BANK, and through the smoke filled back rooms of the U.S. Congress, he did just that. Unfortunately for Rep. McCarthy, the Republican from Bakersfield, California, fellow Republican Stephen Fincher from Tennessee and Republican Congressman Steve Stivers from Ohio have led the charge for a showdown in which, a bill, through a special procedure known as a "discharge protocol”, is scheduled to hit the House floor on October 26^th, 2015. If it passes, as it is predicted to do in the Senate before winding up on President Obama's desk for his signature into law, it will result in the revival of the United States U.S. EXPORT-IMPORT BANK. The Obama administration, as the Kennedy and Reagan administrations before it, supports the EXPORT-IMPORT BANK. If the bill is signed, among the losers will be the governments of China and Russia who have their own worldwide Import/Export banks and who were delighted and encouraged last July when the U.S. export bank was closed. The winners’ bracket is said to include mainstream American business and American workers, including those who were scheduled to lose their jobs at Boeing and G.E. if the U.S. EXPORT-IMPORT BANK is not reopened. Finally, one last note about that list: remember the whip that followed his marching orders from the Koch brothers, Kevin McCarthy? It turns out that many voters in his district directly depended upon the American Institution of the U.S. EXPORT-IMPORT BANK as they earned millions in profits, stayed in business and accessed overseas markets with exported agricultural products. Oh, and by the way, those products were shipped out of the U.S. in McCarthy's neighboring congressional district by American workers punching a time clock at a place called "The Port of Long Beach, California."

--by DOUGLAS CASTLE

Chairman of Global Edge International Consulting Associates, Inc.

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Investment Protection Using A Zero-Coupon Hedge

2015-10-04T17:07:00.000-04:00

PROTECT INVESTED PRINCIPAL USING A ZERO COUPON BOND HEDGE

Article By Douglas Castle Of The Global Futurist Blog And The Taking Command Blog

Written for Publication in The GLOBAL EDGE INTERNATIONAL Blog


A thoroughly uninteresting picture of a mathematical formula for zero-coupon bond computations.

A remotely relevant picture with more "eye appeal" than the above mathematical formula.

IMPORTANT NOTICE: THE INFORMATION CONTAINED IN THIS DOCUMENT SHOULD NOT BE CONSTRUED BY THE READER AS BEING LEGAL, FINANCIAL, TAX, ACCOUNTING, ECONOMIC OR INVESTMENT ADVICE. NO OFFERING OF SECURITIES OR OTHER INVESTMENT INTERESTS OF ANY TYPE IN ANY ENTITY IS MADE HEREBY, NOR IS A SOLICITATION FOR THE PURCHASE OF SECURITIES OR OTHER INVESTMENT INTERESTS OF ANY TYPE IN ANY ENTITY MADE HEREBY. THIS DOCUMENT IS INTENDED FOR GENERAL INFORMATIONAL PURPOSES ONLY, AND IS NOT INTENDED FOR DISTRIBUTION OR TRANSMITTAL BY ANY MEANS. ANY REPRODUCTION OR TRANSMITTAL OF THIS DOCUMENT, EITHER IN WHOLE OR IN PART IS EXPRESSLY PROHIBITED, UNAUTHORIZED AND MAY CONSTITUTE A VIOLATION OF APPLICABLE LAWS. THIS DOCUMENT IS COPYRIGHT 2015 BY DOUGLAS CASTLE.

In many acquisition or investment transactions, the primary concern of the purchaser or investor is the preservation of invested principal. A zero coupon bond hedge functions as a form of principal protection insurance. Is is expensive, but it works very well, provided that the issuer of the zero coupon bond is creditworthy. Also, please note that this particular strategy does not guarantee the timely payment or liquidity of the principal. It merely means that over a designated time if you hold the the zero-coupon bond up to its maturity that upon that maturity date, you can collect the full amount of your principal.

The bonds are bought in the appropriate amount to facilitate the hedge [see the examples below] and are deeply discounted from their future value. These bonds are said to accrete value as interest payments accumulate toward the future value of the bond. And the annual accumulated interest (which is not paid to the holder, but which is instead allowed to accumulate) is taxable in many cases, even if you haven't received any amount of the accretion. For tax purposes, the accreted (but unpaid) interest on the bond may be taxable annually, despite the lack of cash flow to support and cover the amount of this payment. It is for this last reason, that an ideal pairing for a zero coupon bond is with a depreciable real estate or other depreciating asset investment; in these cases the accretion issue is often well offset by the amount of depreciation against it.

Without getting involved in a discussion of the tax ramifications associated with zero coupon bonds, let's examine how they may be used in some illustrative examples below:

In this particular example (and one which is demonstrative of the most extremely conservative case for purposes of illustration only), let us assume that we have $1,000,000.00 of principal to invest. If we invest approximately (all numbers are estimates) $500,000.00 in a potentially high-yielding investment opportunity, but we wish to guarantee the return of our full $1,000,000.00 principal regardless of the level of success or lack of success that we will experience in the investment activity, we may choose to simultaneously purchase a 10-year, 7.1% zero coupon bond for $500,000.00 which will accrete to the sum of $1,000,000.00 in 10 years, independent of all other variables. In essence, this means that we will receive our total principal of $1,000,000.00 back at the end of 10 years regardless of the performance of the investment opportunity in which we had invested the $500,000.00.

While the zero coupon bond as a form of “return of principal guarantee insurance” does reduce our yield somewhat on successful investments, it also provides us with the comforting assurance that invested principal (and in the above case, even our uninvested principal!) will be kept intact and returned to us if the zero coupon bond is simply held to maturity, regardless of the performance of the portion of funds invested in the riskier but more potentially high-yielding investment opportunity.

The true “cost” of this form of guarantee is actually 7.1% per year which we could have earned on the $500,000.00 if we'd had it to invest in alternative opportunities. But we must look at this cost in its appropriate perspective: If the investment opportunity in which we had placed the funds had generated a return of 30% per year, the cost of the protection afforded us by the zero coupon bond hedge would have been extremely worthwhile and actually quite minimal.

Variations on the above formula are available using smaller denominations of zero coupon bonds purchased for the protection of principal of lesser amounts or to a lesser extent. The above example in the first paragraph is the most extreme case. Had we wanted to merely purchase “return of principal guarantee insurance” for only the $500,000.00 invested amount, we could have purchased a 10-year, 7.1% zero coupon bond for $250,000.00, which would have accreted to the sum of $500,000.00 at the end of ten years. This approach, which is admittedly a bit more aggressive than the one set forth in the example in the first paragraph, would have left us an additional $250,000.00 of principal in our discretionary investment fund to do with as we chose.

In utilizing the zero coupon bond hedge, the strategic objective is to pair a high risk-reward investment opportunity with the smallest comfortable level of zero coupon bond present value in order to maximize the spread between the investment upside potential and the cost of the “return of principal guarantee insurance”. The obsessive use of this hedging strategy can be too conservative and counterproductive; however the well-reasoned use of this strategy can provide a more conservative approach to investing in more aggressive investment opportunities with greater potential returns.

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As always, thank you for reading me, and for visiting our website at http://globaledgeinternational.com

Douglas Castle for Global Edge International Consulting Associates, Inc. and The Global Edge International Blog

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Where The Smart Money Will Be Going

2015-09-11T12:11:00.000-04:00

Where The Smart Money's Going

Direct Participation Programs

Preferred Stocks

StartUps

By Douglas Castle For Global Edge International Consulting Associates, Inc. & The Global Futurist

NOTE: This article should not be construed by the reader as containing or offering any financial, investment, legal, tax or accounting advice. Any financial computations, tables, projections, or statements are presented for illustrative purposes exclusively. Global Edge International Consulting Associates, Inc. [GEI] assists companies in creating and constructing their crowdfunding campaigns. For further information regarding this, see http://bit.ly/GEIserve . This article is copyright 2015 by Douglas E. Castle, and it may not be reproduced or republished without the author's express written consent unless the article is reproduced in totality without any changes or deletions, all links and images are kept intact and functional, and proper attribution is given to the author of this article and GEI.

With the increasing incidence of high-volatility periods and “corrections” in the publicly-traded capital markets, and with the low interest returns being offered by well-rated banks and bond issuers domestically and internationally, accumulating a small fortune (never mind about a large one for now) through the traditional vehicles of “buy low, sell high” in the stock market, or “ride the yield curve” in the bond market has become feeble propositions. The risk-reward ratio just isn't as inviting as it might have been during some long periods of economic prosperity and market stability years ago.

Additionally, new vehicles for investment, such as crowdfunding, peer-to-peer (P2P) financing and other variations on these themes using the internet as a surrogate exchange have opened up alternative means of investing capital in microdoses with a built-in means of diversification by simply spreading small investments over a large variety of early-stage enterprises. That having been said, these rapidly-proliferating investment vehicles and their accompanying strategies have a great deal of inherent early-stage business risk, but there is the inherent possibility of hitting several winners, even if this occurs just randomly.

Some smart money rules are listed below:

Rule 1: Diversify your investment portfolio in industries which are not interdependent and not correlated in terms of their pricing in the marketplace (in whichever marketplace that you are trading);

Rule 2: Invest in assets which offer you the possibility of gains (due to a rise in market pricing), but which, first and foremost, generate a current “cash-on-cash” return, in the form of interest, dividends, rents, royalties or a flow through of profits. By way of a quick example, if you invest in an asset which generates a 15.00% return per year, you will have recovered 100% of your investment (without considering any income made by reinvesting your 10.00% received yearly) within 6.67 years, after which time you effectively own your investment for “free”;

Rule 3: Invest in assets which are to be managed with a clear operating strategy, and which are not dependent exclusively upon a future “exit strategy” (such as eventually going public, being acquired by a large conglomerate, etc.) for recovery of your invested capital.

Some smart money opportunities (by type) are listed below:

Preferred Stock In Established Companies: Preferred dividend stocks, or preferred shares, are special equity securities that are considered "hybrid" instruments. Although they trade on equities exchanges, preferreds more closely resemble debt instruments like bonds. Preferred stocks normally carry no shareholder voting rights, but usually pay a fixed dividend.

These stocks are generally not as volatile in their market pricing as common shares, but they offer the holder a “cash-on-cash” return, usually payable semiannually or quarterly. You don't purchase them for capital gains... you purchase them for income and total portfolio growth.

In the current low interest environment where banks are paying interest rates of less than 2% on deposits, there are some very stable preferred stocks which are offering dividend yields (the fixed dividend amount divided by the stock purchase price) of 6% to 7.5% – this is between 3 and 4 times what the banks are offering. And when the price of these stocks falls, the dividend yield rises. They are the last bargains left in the public capital markets;

Stock In Startups Bought Through The Various Internet Platforms: These common shares are usually relatively low in terms of price per share, but have some potential for significant capital gains either in the private aftermarket, or if the shares become publicly-traded on a recognized exchange. They are an outgrowth of the crowdfunding movement which has become so big in the westernized nations.

The key here is to buy a highly-diversified “basket” of these shares and watch them grow. While each company (i.e., each issuer of stock) may either rise or fall, with the usual incidence of risk, many of these shares are priced so low that the least bit of good news will cause a significant percentage rise in their market price.

And while you can lose money on some of your individual picks, odds are that your diversification in the “basket” will have it such that the winners outpace, overshadow and compensate for the losers. Look at each of these purchases as if it were a lottery ticket, but with much better odds of winning;

Direct Participation In Business Transactions And Their Related Investment Opportunities: If you have substantial wealth, you may choose to join an investment club or partnership which invests directly in businesses in exchange for a revenue-based royalty, rent, interest, or share of operating income and certain incidental tax benefits in certain cases. These investments are generally not loaded down with brokerage fees and are not subject to market risk or volatility. The only risk is the risk associated with the successful ongoing operation of the actual business itself. You can learn more about direct participation programs by clicking on the link which follows: https://www.google.com/#q=direct+participation , and you can learn more about investment clubs by clicking on: http://bit.ly/CLUBS101 .

Regardless of what you choose to do, know this: The Smart Money is trickling out of the conventional investments, the customary exchanges and traditional structures. That much is reasonably certain. And don't bother to take that to the bank – banks that pay interest at rates which are lower than the adjusted rate of inflation are ways of merely slowing the loss of your wealth.

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Thank you, as always, for reading me,

Douglas Castle for Global Edge International Consulting Associates, Inc. and The Global Edge International Blog

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Launching Your Startup's Crowdfunding Campaign!

2015-08-31T21:52:00.003-04:00

Launching Your Startup's Crowdfunding Campaign

Written By Douglas Castle For Global Edge International

The four types of crowdfunding, simply stated, are: (1) donation-based, (2) reward-based, (3) equity-based and (4) debt-based.While this article will only be dealing with reward-based crowdfunding (i.e., where no charitable contributions are solicited and no offerings of equity or debt securities are made), it is useful to understand the distinctions among the four types.

In donation-based crowdfunding, the crowd gives money or some other resource because they want to support the cause. One example is a youth baseball which is raising money to travel to a tournament. The crowd gives money and gets nothing in return, other than the good feeling that comes with knowing the team can travel to compete.

In reward-based crowdfunding, individuals forming the crowd give money to a business in exchange for a “reward,” typically the product or service that that particular company produces or provides. Reward-based crowdfunding has been made popular by crowdfunding sites such as Kickstarter and Indiegogo.

With equity-based crowdfunding, members of the crowd become part-owners of the company which is raising funds. In other words, the company sells some or all of its shares to the members of the crowd. As equity owners of the company, the crowd realizes a return of its investment and, assuming the company performs well, receives a share of the profits, in the form of a dividend or distribution.

With debt-based crowdfunding , the company raising money does not sell shares, but instead borrows money from the crowd. The individuals lending the money receive the company’s legally binding commitment to repay the loan at certain time intervals and at a certain interest rate.

At the present time, the most popular and least complicated type of crowdfunding arrangement is reward-based. It does not involve legal or regulatory filings and it does not cause any dilution or sacrifice of equity; further, it actually creates prepaid sales of the company's early-stage product or service. Not only are funds raised to finance the company's operations, but a customer market is also being built at the same time. Every contributor is a customer. If you have a very large group of contributors, even if the average amount of each contribution is fairly small ($10.00 to $25.00), you've already made a significant entry of your company's product or service into the marketplace.

On the downside, since the average contribution amount tends to be so small, you'll want to be very realistic about just how much money you'll be able to raise through your pavilion on your selected crowdfunding website (sometimes referred to as a “portal”). While you might hear about a high-tech startup raising (and oversubscribing!!!) $12,000,000.00 on Kickstarter, cases such as those are in the distinct minority. The average crowdfunded reward-based campaign raises slightly less than $18,000.00. [sigh] Doing some quick math, if the average contribution (per contributor) were, say $17.50, it would require 1,029 contributors [$18,000.00/$17.50] to raise the full complement of $18,000.00. Wouldn't it be better if you could raise the average contribution level to $25.00? – then you would only need 720 contributors in order to complete a $18,000.00 crowdfunding raise.

There's no doubt about it – crowdfunding is a numbers game, and your campaign has to appeal to a very substantial number of participants if you want to raise a significant sum. In addition, you might want to offer an aggressive system of rewards in order to raise the average contribution per contributor.

The fact is that your campaign must reach the maximum number of contributors at the highest possible average contribution per contributor in order to be successful.

After you've created a quick one paragraph summary of preceisely what your project will be doing (including the names of well-known companies which are comparable – for proof of concept, and including how and why your branded company will be different/better than these would be competitors for your marketplace), put together an excellent attention-grabbing “elevator pitch,” and created a well-crafted, catchy branding slogan for your product or service, here are the ten steps recommended by Founder Institute in order to make your campaign a stunning success:

Educate yourself about crowdfunding and choose the right platform

Having a successful crowdfunding campaign takes time, preparation, and hard work. The more you know about crowdfunding the better. Find similar campaigns to see what has worked. Look for market and price trends for rewards. See which press is writing about those campaigns and maybe reach out to the entrepreneurs for advice.
Choosing the right platform is more important than you might think. The obvious choices would be Kickstarter or Indiegogo, but there are pros and cons to going with one of the giant platforms. Every platform works in a different way – some specialize in certain industries, while others offer guidance and more hands-on packages. It’s important to pick the one that’s best suited for you.

Build pre-campaign momentum

Start marketing your campaign at least one to six month before you launch. Build your social media following and contact list, have people sign up for pre-orders, and reach out to press with a teaser video. Your goal should be to have 30% of your funds committed before you launch.

Gather contacts and evaluate your network

We recommend dividing your contacts into five groups, based on circles. Group 1 starts with your close family and friends all the way to group 5, which is relevant press/bloggers. Evaluate your network to help you choose your funding goal (see below).

Choose your funding goal

You want a number that is high enough to achieve your business goals but low enough that you are confident that you can reach your target. Compare how much capital you need verses how much capital you think you can actually raise. If the amount you need is drastically higher than what you think you can raise, consider raising money in multiple phases. Instead of trying to raise enough money to cover every cost and every milestone, just raise enough to get you to the next major milestone.

Develop your story: Video and Campaign page

Use your video and campaign page to get people excited about what you are doing. The more effort you put in the more likely people are to support you. People don’t want to back a haphazard campaign. Explaining how you turned your idea into a reality and why you need support is just as important as your actual product.

Entice people with rewards

Rewards are a great way to thank your backers and entice people to contribute more money. You should have 5-10 rewards at different price points to give people options. On the lower end you can offer a handwritten thank you card or a t-shirt. For the higher end rewards focus on custom product designs or VIP/private rewards.

Create a marketing plan and template everything

This is arguably the most important element of a crowdfunding campaign. If you expect to throw up a cool video and raise a $100k you might be in for a rude awakening. You need to tell everyone you know about the campaign and have your network tell their friends. Come up with a plan to leverage your network through social media, e-mails, personal phone calls, and networking. Your marketing plan should also include a strategic way to reach out to press to have them write about your campaign.
Template everything. This will take some organization and planning, but will save you so much time come launch day. Draft outreach e-mails, thank you notes, campaign updates, press release, and schedule social media posts (bufferapp.com is a great tool).

Launch time

This is the day you’ve been waiting for. After months of preparation and planning, it’s time to execute and share your unique vision with the world. While your campaign is live, dedicate time everyday to promote your campaign, read comments, respond to e-mails, thank backers, and send updates. Interacting with your supporters is crucial to building a loyal community for both your campaign and your company going forward.
Even though you’ve spent months planning, it’s important to do weekly evaluations during your campaign to make sure you are on track to hit your funding goal.

Throw a kick off party

A kickoff party is a great way to gain momentum on day one. Invite your close friends over for pizza and beer (or wine and cheese). Give them a brief introduction of what you are doing, have a tablet on hand for them to contribute, and encourage them to share the campaign link on social media.

Track everything
Track who contributes, what rewards are the most popular, and everything else in between. When people contribute thank them and ask them to share the campaign link with their network. If people haven’t contributed send them friendly reminders.

This is by no means an exhaustive list. Navigating your way to a successful crowdfunding campaign can be tricky and there is no guarantee you’ll be prosperous. It takes doing your homework and being diligent with the process. For many people, it’s overwhelming and hard to know exactly what to do, which is why picking the right platform is so important. No matter what happens stay focused and follow your passion. Hard work usually pays off, in one way or another, but that’s another blog post in itself!

If you follow the above program with all-out effort, diligence in the details and dogged persistence, you may well reach your capitalization objectives. And now for a few additional details...

Some additional details follow:
Item 1: Always thank each of your contributors with a personalized note;

Item 2: Periodically give your contributors updates about the campaign and about the progress of your company;

Item 3: Use free press release services weekly in order to spread the news about your campaign, your company and your progress;

Item 4: Be certain that you have an excellent “sampler” website or micro-site to support your service, product or company. Make it fascinating and captivating. Don't make it overly detailed;

Item 5: Be certain that you have an excellent video about your company and its services or products that introduces the members of the team and creates anticipation and excitement. Use your slogan as many times as possible during your video;

Item 6: Always deliver (on time!) the rewards you've promised to your contributors;

Item 7: Try to get one or more celebrities to become contributors to your campaign; this makes for excellent press and adds instant star power credibility to your campaign and your company.

Best of luck with your crowdfunding campaign. We'd love to read about your success!

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Good luck in your search for capital, and thank you, as always, for reading me.

Douglas Castle for Global Edge International Consulting Associates, Inc. and The Global Edge International Blog

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Increase Profitability With Zero-Based Budgeting

2015-08-22T16:47:00.001-04:00

INCREASE PROFITABILITY WITH ZERO-BASED BUDGETING

By Douglas E. Castle For GEI Consulting

Originally Published In the GEI Blog

In business, our basic financial objectives are to 1) increase the number of units sold; 2)increase profit margin per unit sold; and to 3) decrease fixed and semi-fixed expenses – all of this so that our company may consistently maximize profits [assuming, of course, that we do not sacrifice quality and service standards] as operations continue. While we have neither the space nor time to delve into the revenue and unit pricing objectives, we can tackle the expense reduction issue head on by utilizing zero-based budgeting.

Typically, budgets are mapped out or structured based upon existing expenses, which are looked at line by line, and where each expense line is multiplied, too often unquestioningly, by some increase factor (i.e., some percent per month or some percent increase per year). When the budget variance reports (actual versus budgeted expenses) are examined monthly or quarterly, the previously mentioned approach artifically inflates the quality of performance; if this budgeting approach is continued unchecked, actual expenses will be consistantly lower than their budgeted amounts (as if operations were running quite efficiently) even as the company is losing money by the boatload by overspending. This simplistic time-saving type of budgeting, while exceedingly common, leads to over-inflated budgeted expenses, poor variance feedback, and consequently, to poor expense controls and policies. Some real-life examples:

==+ In very large companies, I have actually seen cases where discontinued departments and functions were actually given budgetary expense allocations because nobody cared to check on whether or not those departments or functions were still in existence. And this error was compounded with each fiscal year. Governmental departments and divisions of Not-for-profit entities are notorious for doing this, as are some For-profit entities – especially the larger, more structurally complex ones.

==+ In other large companies, I have witnessed a managerial mentality where “If we don't spend every bit of what we were budgeted for this year, we'll lose our allocation for next year. We'd better use it before we lose it!” This type of thinking guarantees expense inflation and incredible waste. And once again, governmental departments and divisions of Not-for-profit entities are notorious for doing this, as are regular For-profit entities – especially the larger, more structurally complex ones.

Needless to say (but I'll say it anyway) the two above procedural and mindset errors create tremendous financial problems as well as a crass distortion in the evaluation of actual performance. The possible “cure” for this erroneous protocol and reasoning is to employ a zero-based budgeting session at least once per year. The process is actually simple, and I've distilled it into several straightforward steps which you can follow to do a zero-based budgeting at some regular intervals throughout the year:

Step 1: Create a Budget Review Group comprised of major stakeholders and other participants who will not be threatened by the results of the process and who have a substanital interest in the profitability of the enterprise;

Step 2: Access a line-by-line expense budget (like the type you would use to perform a variance analysis) as a worksheet;

Step 3: Examine each line of the expense budget in terms of its utility. What purpose does it serve? Is it necessary? Should it be discontinued or continued? Is its relevance increasing or declining? Does it directly serve the purpose of generating profits or of supporting profitable operations for the business?;

Step 4: Eliminate budgeted expense items as appropriate. Reduce other expense items to their appropriate level. Remember that the key question to ask in a zero-based budgeting scenario is “Does this expense support revenue growth or production of goods or services to support those revenues?” Reconstruct the budget based upon these crucial revisited assumptions;

Step 5: Take the reconstructed budget and make the necessary eliminations, cuts and reductions to the actual business, as if you were looking at the business as an outside “efficiency expert” or cost accountant. This is a politically perilous step, as it will likely undermine some free benefits to certain individuals, destroy some hidden agendas by starvation, and stop the methodical step-by-step process of internal fiefdom-building amongst certain power-mongers within your managerial infrastructure.

Despite the temporary discomfort caused by the reshuffling which invariably follows a zero-based budgeting “correction,” the results are almost always worth the investment of time and effort. In sum, zero-based budgeting can give your organization a refreshed and clear prospective that will enable you to more readily serve the purpose of profitability for all stakeholders.

Reduce your corporate waste footprint with zero-based budgeting. Be environmentally-friendly.

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zero-based, budgeting, business, financial, analysis, increase, profits, success, cost containment, variance analysis, GEI Consulting, Douglas E. Castle, financial analysis, accounting

Thank you, as always, for reading me.

Douglas Castle for Global Edge International Consulting Associates, Inc. and The Global Edge International Blog

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Insiders Are Selling Their Shares? What Should I do?

2015-08-14T10:18:00.001-04:00

Insiders Are Selling Their Shares!

What Does This Mean?

And What Should I Do Now?

By: Douglas Castle For Global Edge International And The Global Edge International Blog

When insiders, particularly officers, directors and owners of large blocks of stock (5% or more of the total shares issued and outstanding) are suddenly starting to sell off their shares of stock in a publicly-traded company, especially one in which you have an investment, before you take action, extend your very best efforts to try and determine what the underlying reason for the selloff is. Depending upon that reason (or reasons), you may wish to either: follow suit and liquidate some or all of your holdings; just sit tight and maintain your position; or actually purchase more shares. While this article does not provide financial, tax, investment or legal advice, it may help you in making a more-informed decision in terms of your own investment tactics or strategy with respect to your investment in that specific company. Since we at GEI Consulting are extremely imaginative, we'll refer to the subject company as “Company X”.

There are a host of reasons why significant shareholders may be selling off their shares in Company X, and an outline of some of the most prevalent possibilities are discussed below:

==+ They have come to the end of a statutory, regulatory or contractual stock holding period, and they are selling off some of their holdings to establish some liquidity – this is, of itself, harmless and is generally acceptable, especially in the second or third year following an IPO, or after a year or two of having commenced a C-Suite position in a more-established company.

==+ They are either retiring or contemplating retirement (they are at an advanced age) to pursue personal interests, and wish to 'cash out' to enjoy the benefits of a financially-substantial departure from a successful career.

==+ They are selling off shares and either reinvesting in Company X or lending the post-sale proceeds to Company X, presumably because Company X is illiquid or is accumulating losses. This type of activity can either be interpreted as admirable and positive heroics, or as a prelude to a death knell in the event that the tight cash situation is not just temporary or seasonal.

==+ If they are selling off shares (which they might have gotten very inexpensively early in Company X's evolution, or through the exercising of options or warrants) and using the proceeds to buy additional shares, it generally means that they believe that the stock is undervalued and is due for an increase through a market revaluation.

==+ If they are selling off substantial numbers of shares and not reinvesting proceeds in Company X, it generally means (barring an individual holder's personal financial hardship) that they believe that the stock is overpriced and is headed for a valuation adjustment in the downward direction.

Depending upon the circumstances (some of which are set forth above) and the underlying reasons, take action appropriately.

In order to get information on these substantial trades by influential shareholders, some good sources are these:

http://insidertrading.org/

http://www.insider-monitor.com/

http://insiders.morningstar.com/trading/insider-summary.action

http://insidertrades.org/

http://www.insider-monitor.com/insider_stock_trading_report.html

http://online.barrons.com/public/page/9_0210-instrans.html

http://www.secform4.com/

Generally speaking, the pundits (they generally like to call themselves that) tell us that when it comes to aggregate insider buying and selling, the following general rule applies [although in taking a close look at the individual circumstances involved as described above in this article, the general rules are possibly a gross oversimplification]:

When the buyers outweigh the sellers (in terms of number of parties and aggregate volumes), insiders are generally bullish (optimistic) about the short-term prospects of Company X;

When the sellers outweigh the buyers (in terms of number of parties and aggregate volumes), insiders are generally bearish (pessimistic) about the short term prospects of Company X.

Also, in the interest of keeping our nomenclature crystal clear:

"Insider trading" is a term that most investors have heard and usually associate with illegal conduct. But the term actually includes both legal and illegal conduct. The legal version is when corporate insiders—officers, directors, and employees—buy and sell stock in their own companies. When corporate insiders trade in their own securities, they must report their trades to the SEC.

Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Insider trading violations may also include "tipping" such information, securities trading by the person "tipped," and securities trading by those who misappropriate such information.

Thank you, as always, for reading me.

Douglas Castle for Global Edge International Consulting Associates, Inc. and The Global Edge International Blog

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Peer To Peer Lending For Startups

2015-08-10T10:24:00.003-04:00

PEER TO PEER LENDING FOR STARTUPS

If your startup or fledgling enterprise requires additional working capital, a peer to peer (sometimes abbreviated as P2P) business loan might provide a partial solution to your capital needs. These loans, which are generally in the $10,000.00 to $35,000.00 range (although there are exceptions in certain cases and larger sums may be available) are generally available for terms of between six months and five years, and they vary widely with respect to costs, terms and loan covenants. These sources are not constrained or subject to general banking regulations

While these loans are universally priced higher than bank loans, today's bank loan approval criteria make it extraordinarily difficult for a business with a limited operating history (or any small business for that matter) to obtain a loan. The loans available from banks and other traditional lenders look to such security as second mortgages on the homes of principals and also take into effect FICO credit rating scores – and, as we know, very few entrepreneurs have sterling personal credit reports.

Peer to peer loans may be a means of paying for some of the initial startup costs associated with commencing your operations, or as a bridge to the successful conclusion of a crowdfunding.

Author and expert Trevor Dryer has written an excellent article on the state of peer to peer lending as of the date of this writing. It is a must read for all entrepreneurs.

###

Understanding the Risks and Rewards of Peer-to-Peer Lending

By Trevor Dryer
If you run a small business, you probably know all too well the challenges of trying to get a loan. It can take days to research options and fill out inches-thick paper applications, only to wait weeks, and even months, to find out you were turned down. All the while cash flow is tight, and you’re struggling to hire new employees, manage inventory, buy new equipment, or open a new location.
As you may have experienced, getting a business loan has gotten more problematic during the last several years. The economic downturn in 2008 created significant obstacles for banks and other traditional “Main Street” financial institutions that traditionally lend to small businesses.

State of Small Business Lending

For example, many banks are increasing their capital reserves to comply with new standards initiated by bank examiners and other regulators, which can undermine a banks’ ability to underwrite small business loans. In addition, compared to large businesses, small businesses are riskier lending propositions because they are more sensitive to swings in the economy, have higher failure rates, and fewer assets to use as collateral.
Small business loans also are not as profitable for banks, because they cost the same amount to originate as larger loans. For this reason, banks tend to put less emphasis on lending in the sub-$500,000 range. This creates a large lending gap for small businesses, which tend to seek out significantly smaller loans; 70 percent of small businesses seek loans of less than $250,000, with more than half of those needing loans of $50,000 or less, according to the Federal Reserve’s “Small Business Credit Survey.”
Realizing an opportunity to reach an underserved market and building on the trend of crowdfunding, new types of small business lenders have emerged. Funded by Wall Street investors, these online and peer-to-peer lenders–such as OnDeck and Lending Club–are leveraging technology and user-friendly Web-based application processes to quickly respond to loan requests from small businesses. By reducing the origination costs, these processes make it more profitable to lend smaller amounts.

Rewards of Peer-to-Peer Lending

Online lenders are exploding in popularity, thanks to their customer-friendly practices and ability to give small businesses fast access to much-needed capital. Industry experts estimate that since 2007 online lenders have originated an estimated $10 billion worth of small business loans, with the majority of the lending taking place in the last few years.
Despite the buzz around online lenders, they still only account for less than 1 percent of total small business loan volume. In comparison, new small business loans originated by banks alone account for roughly $200 billion annually, according to the FDIC.
While traditional lenders still originate the lion’s share of small business loans, there are certainly times when working with online lenders may make sense for your business. For example, if your business needs cash right away or requires flexible payment terms, such as paying a percentage of your credit card receivables instead of a fixed monthly payment.
If you’ve just started a business, getting a loan from an online lender also may be an option to help you start establishing a credit history. Or, if your business has a less-than-stellar credit or financial situation, it could help you repair your rating to help you qualify for a loan from a traditional lender in the future.

Risks of Peer-to-Peer Lending

As with any decision related to your business, when seeking loans from online lenders, it is important to weigh the risks versus the rewards. Behind the slick user interface, excellent marketing tactics, and fast approval turnaround, there are some potential pitfalls that could negatively impact the bottom line for many small businesses.
It’s important to consider several factors when choosing an online or peer-to-peer lender to ensure you don’t get caught off-guard by unpleasant surprises, such as:
● Restrictive or shorter repayment periods. Some online lenders require payment in just six months, which is considerably shorter than the three year intermediate-term loans that banks offer. This would result in monthly payments higher than if you had a longer repayment period.
● Exorbitant interest rates. Many small businesses are used to comparing the cost of loans by using the annual percentage rate (APR), which is the periodic interest rate multiplied by the number of compounding periods in a year, and includes certain non-interest charges and fees. But doing the same when deciding whether to use online lenders becomes problematic because repayment periods are often less than a year, there may be terms that require larger payments in the first few months of the loan, or there are hidden fees not incorporated into the advertised interest rate.
Some online lenders may not even technically be offering loans per se. If you look closely at their contracts, their offers may be structured like a cash advance, which is similar to the tactics used by payday lenders to avoid having to comply with lending regulations. By accepting a “cash advance” instead of a loan, your rights could be greatly limited when compared to a traditional bank loan that offers protections through federal and state lending laws. Because of these variations, you often end up paying significantly more for a loan from an online lender.
A comparison of online lenders by Fit Small Business estimates that average APRs range from 40 percent to 80 percent. Once the various fees are factored in, borrowing from other online lenders could potentially result in estimated APRs as high as 300 percent. Banks and credit unions, on the other hand, typically offer an APR of 6 percent to 8 percent.
● Surprise fees. While banks often include their in the calculation of APR, online lenders can have a number of fees of which you may not initially be aware. You will want to check the fine print closely to understand the types of fees for which you’ll be responsible, including those for origination, daily loan guaranty, and prepayment.
● Lack of a personal relationship. Banks typically forge long-term, personal relationships with their account holders and understand the nuances of the small businesses and the local markets they serve. If you primarily use one bank for all of your accounts, this relationship can translate into lower fees and ancillary perks, such as higher rates on savings accounts or waived annual fees on accounts or credit cards.
These long-term, personal relationships can become more valuable as your business grows, because your bank can provide new financial products or structure financing differently to correspond with your company’s stage of growth. Many banks indicate they would prefer to loan to their existing clients, but cannot if these small business customers don’t meet their lending criteria.
Online lenders do not have the ability to develop these types of personal, face-to-face relationships with small businesses.
● Who is funding your loan? The source of funding for loans also can play a role. Banks rely on FDIC-insured deposits, which helps keep the cost of capital low. Online lenders have high-cost capital from institutional investors and other sources that are looking for high yields, and this capital is at considerable risk if Wall Street loses interest in funding this type of business model or decides to move their capital elsewhere.

New Standard for Borrowers

Online lenders have truly set a new standard for borrowers. They’re improving the user experience with simplified online loan applications and, in some cases, almost instantaneous lending decisions. They’re also expanding into a diverse range of loan options for general consumers, students, and small businesses.
Banks and credit unions are quickly learning from the competitive pressure and success of online lenders. Some of the most forward-thinking lenders are now adopting technologies that will mirror the online lending experience and offer the low interest rates that only banks and credit unions can provide.
These technologies enable loan officers to make faster decisions while reducing origination costs for even small dollar loans, which in turn will increase the number of small business loans banks and credit unions can make and meet the needs of businesses that are seeking smaller loans.

About the Author

Post by: Trevor Dryer
Trevor Dryer is the CEO and co-founder of Mirador Financial Inc., a small business lending platform for banks and credit unions. He has dedicated his career to creating financial technologies that create opportunities for both financial institutions and their small business customers. Prior to Mirador, Trevor launched new financial and payment products at Intuit for the company’s small business and banking divisions. Trevor earned a Bachelor of Arts degree from Harvard University and a Juris Doctor from Stanford Law School.

###

Some peer to peer lending match up platforms (for information purposes only, as neither the author nor GEI Consulting endorse or vouch for the quality, integrity or pricing of any of these services) are listed below for your investigation. You must investigate each of these platforms thoroughly before proceeding with the loan application process, and be certain you understand fully all of the terms offered to you. These loans can be very expensive in many cases, but they may well be cheaper than either the cost of undercapitalization or the cost of inviting a stranger in as an equity participant:

Lending Club

Prosper Marketplace

Funding Circle

Upstart

Kiva

Zopa

OnDeck

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Good luck in your search for capital, and thank you, as always, for reading me.

Douglas Castle for Global Edge International Consulting Associates, Inc. and The Global Edge International Blog

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Leadership: Delegation Is Your Most Important Responsibility

2015-07-29T09:48:00.000-04:00

Leadership: Delegate Or Die

One Of the Most Important Responsibilities Of A Leader Is To Delegate Responsibility

By: Douglas E. Castle For The Taking Command Blog, The GEI Consulting Blog, GEI Consulting

To be a leader and to maintain a position of leadership, you must be a competent and efficient delegator. By the act of delegating, you are not relinquishing control – you are actually expanding the realm and scope of your control.

The larger the responsibilities and the larger the organization, the more proficient you must be at delegation. In the military, “delegation” is defined as the action by which a commander assigns part of his or her authority commensurate with the assigned task to a subordinate commander.

While ultimate responsibility cannot be relinquished, delegation of authority carries with it the imposition of a measure of responsibility. The extent of the authority delegated must be clearly stated. Your success at delegation will determine the strength and length of your reign as a leader and commander. The most significant insights and skills which are required in successful delegation are listed below. They are worth studying:

==+ If you are obsessive-compulsive by your nature, do all that you can to rationally counterbalance this dangerous impediment to effective delegation. You cannot micromanage and be a leader. You cannot be the servant of your subordinates because you are insistent about things being done exactly as you would have them done;

==+ You must constantly keep the big picture and the broader focus in mind. If you are a perfectionist and overly detail-oriented, you will never be able to attain your organizational objectives while mired in minutiae;

==+ Understand all of your responsibilities, and itemize or componentize each of them. You'll find that each individual component can be delegated (as it must) to someone in your organization whom you can select. If the right individual is not among your inventory of Human Assets, then you must either replace some of your people, or your must acquire some new members with the requisite skill sets. The objective is to export as many of your responsibilities as possible, while retain the central responsibility of organizational stewardship, oversight and goal attainment;

==+ When you delegate responsibility for the accomplishment of a task or function, also remember to grant the requisite authority and to impose the necessary accountability to the person to whom you've charged with the job. Responsibility without authority is a recipe for managerial impotence and non- performance. Responsibility without accountability is a recipe for waste, abuse and failure;

==+ Since you, as a leader, are ultimately responsible for the successful and efficient attainment of your organization's most important goals, you must constantly monitor the performance of those to whom you've delegated, without being drawn in to correcting their mistakes yourself. Observe, measure, suggest, monitor and determine whether the subject task has been assigned to the right individual; sometimes a change may be warranted.

==+ Where you observe leadership potential in some of those persons to whom you've delegated tasks, you may find it wise to increase their roster or responsibilities, but to also grant them greater authority to sub-delegate to others who are subordinate to them.

Remember that the greatest leaders know how to identify and cultivate leadership within their organizations. Be aggressive and bold about identifying and leveraging the leadership talents of other leaders within your organization. Encourage leadership and acceptance of increased responsibility. Reward it and give it appropriate recognition. Empowering other leaders liberates you to be a greater leader yourself.

==+ As you develop leaders and assign them to their respective specialty areas (not unlike fiefdoms within a kingdom), clearly identify where each one's territory begins and ends. Clearly define their responsibilities with minimal overlap.

Keep your subordinate leaders separated from each other (unless you are present and orchestrating or conducting a meeting or hearing reports) – fiefdoms should not compete, but neither should their feudal lords unite, lest they undermine the king's leadership. In brief, don't permit your subordinates to take you over. Delegate, but do so without ever permitting your absolute command from being undermined.

Keep your emerging leaders separated from each other, and even instill a competitive spirit amongst them to 'fight' for your approval. As always, thank you for reading me.

Douglas E Castle

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Labels, Tags, Keywords, Categories And Search Terms For This Article: Douglas E. Castle, leadership, management, delegation, responsibility, authority, taking command, grooming leaders, accountability, business, career advancement, self-promotion, personal power, organization, GEI Consulting, The Taking Command Blog

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Measuring Your Social Media Progress

2015-07-28T10:38:00.000-04:00

MEASURING YOUR SOCIAL MEDIA PROGRESS

There are some interesting and useful metrics which you will want to use to measure the success (or incremental progress at intervals) of each of the individual social media items in your social media mix. You'll find these simple guidelines indispensable – especially if you monitor them at consistent intervals with genuine vigilance.

And while these are not actually a means of measuring your actual return on dollars or time invested in social media, they are wonderfully basic and easily calculable rules of thumb to inform you as to how each of your social media tools is performing, and what the whether or not the associated performance trend is improving.

An example of this type of measurement is the number of “likes” that you have on your Facebook company page; while nobody can consclusively assign a dollar value to each “like”, it is commonly understood that the more “likes” that you have, the more probable it is that you are engaging your audience, and that that audience may contain some future customers or clients.

While the metrics used in this article are not directly dollar-equated, they will provide you with an indication of how well your campaign to engage an audience (and some possible prospective clients or customers) is going. These are “quick and dirty” tests and are not totally scientific – there's been no correlative study. This material is all anecdotal, and your Social Media Guru might even find some of this material objectionable. You've been warned.

The social media selected for this article include Twitter, Facebook, LinkedIn, Google Plus (G+) and business blogging. While this last item is far too often excluded from the general categorization of social media, it is actually critical in a demographic environment where “content is king.”

Other social media such as Pinterest, Instagram, Digg, Reddit, Foursquare, and a host of others are not covered because we're still experimenting with their metrics. We've also excluded such video media as YouTube, Vimeo, and others because of the already-extensive measurement information coverage available on the Internet.

=> Twitter:

The ratio of Followers to Following should be increasing. If this ratio is less than 1, you'll look like a beginner. The higher this ratio, the more of an influencer you will appear to be – and in dealing with social media, appearances are important in terms of harnessing the undisputed driving power of the herd mentality.

The ratio of your Tweets to the number of Followers should be decreasing, which indicates a higher and increasing level of engagement and influence (theoretically – these ratios are all theoretical), unless you are extraordinarily chatty or have a significant flow of RSS material from third-party sources being pumped into your twitterstream via Twitterfeed or some similar application, in which case this ratio would be falsely negatively affected.

=> Facebook:

The number of likes on your company or brand page should be increasing weekly. If your total page likes do not exceed 1,000, you'll look like a beginner. More page likes indicate the acceptance and recognition of your brand, and/or of the content that you place on your page. Try your best to provide some interesting or insightful content on the site daily. The more frequently that you post, the more likely it is that your page will acquire additional likes.

Also, as with Twitter, a greater amount of likes is more apt to generate new additional likes due to the herd mentality of many viewers. If a substantial number of the likes are originated through your company's blog, website or newsletter, the more potent those three sources are in terms of audience engagement.

The ratio of likes originated from non-Facebook sources to Facebook-originated sources should be increasing over time, indicating that your other branding campaigns are working well.

Getting positive page reviews and status update likes are generally indicative of the potency of your page and its flow of content, more than of your branding, per se.

=> LinkedIn:

Followers on your LinkedIn company page are similar to “likes” on your Facebook company or brand page, except that they are generally more difficult to get. As with Facebook, the ratio of followers originated from non-LinkedIn source to LinkedIn sources should be increasing over time, indicating that your other branding campaigns are working well.

Since LinkedIn is more of a business-to-business and professional-to-business platform than Facebook, which is far more consumer-involved and consumer-engaging, acquiring additional followers generally speaks more to how your company is being perceived as a professional or business thought leader or influencer than as an endorsement of or engagement with your brand.

In very general terms, if you have in excess of several hundred followers on your LinkedIn company page, you're looking good. It is much more of a challenge to obtain LinkedIn followers than it is to get Facebook page likes, positive reviews or status update likes. By the way, “status updates” are the same as posts.

=> Google Plus (G+):

Google Plus is arguably one of the most potent SEO media, and it is powerful way to refer viewers or followers to your website, blog, and other social media. Google Plus is akin to some combination of Facebook, Twitter and a blog posting platform, all rolled up into one. Your company can use Google Plus as a means of achieving brand acceptance and name recognition, as well as in garnering influencer and thought leader status from the business and professional communities. It is an excellent social media tool precisely because it lends itself to so much multi-purposing. Don't underestimate it and don't underutilize G+.

The variables to be looked at are “acquaintances”, “Followers” and “views”. Acquaintances will also be deemed to include, “friends”, “family” and any other category of person whom you can add to your list by your own action. At present, the maximum number of these unilaterally gathered parties permitted by Google totals 5,000.[If you don't believe me, just try to add some new acquaintances afterr you've hit the permitted maximum and Google will send you a cold reminder that you cannot add any additional persons to your circles 'at this time']. There are no limits to the number of followers which you may accumulate and the number of views (of your G+ profile page).

The first raio to be looked at is the number of Followers to the number of acquaintances, which should be rising. Once this ratio exceeds 1.0, and provided that the number of your followers exceeds 5,000, you are on your way. Once the number of your followers exceeds 10,000, you will become noticed, and the (now infamous) gravity pull of the herd mentality will bring you even more followers and even more views with less effort. If your posts to G+ are laden with links to your other social media, it will be feeding those other media with new likes, views, members, followers and so forth, as well. You'll find that your G+ results appear very early on in your Google search results, and that your other social media postings will be gaining prominence if you've been building them through the use of hyperlinks in you G+ posts.

The second ratio to be evaluated periodically is the number of views to the number of your Followers. While it is difficult to give you a benchmark objective on how this ratio should be rising and what it should ideally be, if you've exceeded one million profile views and you've gotten 10,000 Followers your G+ campaign is getting noticed. It should be noted that one million profile views if regarded (anecdotally) as a good benchmark to indicate that your post to G+ are carrying a good deal of influence. Having said all of this, a ratio of 100 views per Follower (on average) is an excellent target to meet and to exceed.

=> Business Blog:

Your blog's success (in terms of readership) is a major measure of your influencer and thought leadership status. It is also obviously a measure of the quality and magnetism of your content. You should be looking at posting one new article per week (or more if posible) to keep your blog “fresh” and have it frequently viewed by the spiders, robots and other cyberspace creatures that constantly search for an review new content.

The variables to be looked at are simply the number of posts and the number of views. As your number of posts (cumulatively) is growing, average number of views per post should be growing (for the blog as a whole), and the number of views per post (individually) should generally be tending upward as well, although you may expect some fluctation depending upon the strength of the individual post – and the strength and virality of posts will vary depending upon a wide variety of factors, from the number of illustrations (images) embedded into your posts, to the title of any given post. An exciting title can do wonders for the traction of a single post.

In Summary:

Monitoring each of the social media tools in your social media mix will tell you if you are heading in the right direction for improved status in terms of branding, name recognition, being an influencer and being a thought leader. I would strongly advise that you run a quick set of diagnostic ratio and growth tests on your social media weekly to be able to intelligently assess whether or not you are making progress.

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Thank you, as always, for reading me.

Douglas E Castle

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The Revenue-Expense Wave Effect - GEI Consulting

2015-07-19T15:20:00.001-04:00

The Revenue-Expense Wave Effect

Written For GEI Consulting By Douglas Castle

Published On The GEI Website And On The GEI Blog

In your business, as in many businesses, you may find that expenses tnd to remain somewhat inert while revenues may significantly fluctuate. Said in another way, revenues have a greater amplitude than expenses (taken as a whole), and adjustments to expenses tend to lag behind changes in revenues. In practice, many companies (perhaps yours is included) tend to be reducing expenses as a reaction to declining revenues, but are making those cuts , ironically, just as revenues are beginning to climb again.

This lagging expense adjustment period tends to create periods of loss, and periods of unsupported revenues – in a perfect world (unlike the one we all live in), expenses would react immediately to changes in revenues – but they just don't. The longer this expense adjustment period, the greater the business' potential for periodic and recurring losses. Conversely, the shorter this adjustment period, the greater the business' potential for capturing the maximum profit opportunities.

Of course, your business is limited in its ability (regardless of how vigilant management is) to cut expenses to the extent that some of these expenses are actually fixed costs, some of them may be subject to unseverable contracts, some of them are a function of relationships that cannot be traumatized, and some of them represent the expense associated with items which must be ordered in advance (and which order quantities are based upon anticipated revenues) and costs which are the result of collective bargaining.

Actionable Items:

List each and all of your business' costs (fixed, variable, semi-variable, etc.) and analyze 1) the time period required to adjust those costs (if applicable, i.e., not fixed costs); and 2) the consequence (or incidental cost) of adjusting each of those costs. Prepare these in a tabular format.

Create a rapid feedback reporting system regarding revenues. Know your revenue position on a daily basis, and be certain to note any trends which persist for more than a few days. If the trend is upward, that is wonderful – pat yourself, as well as your marketing, promotion and sales personnel assets, on the back. If the trend is down ward, trigger the alarm bells early on and adjust the expense items which can be adjusted without traumatizing your business and its vendors.

When revenues are on the decline, be an early responder by making rapid expense adjustments as can be tolerated, and by also addressing the reasons that revenues are spiraling downward (i.e., seasonal demand, competition eroding market share, customer satisfaction issues, etc.). The key, as it always has been, is to constantly monitor your company's performance in all aspects.

Thank you, for reading us.

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The StartUp Entrepreneur's Greatest Challenge

2015-07-14T13:22:00.000-04:00

The Startup Entrepreneur's Greatest Challenge

The startup entrepreneur's greatest challenge is to weigh possible sunk costs (throwing good money or effort after bad), against the power of persistence.

Time and effort are the entrepreneur's greatest inherent assets. These are complemented by capital, a good supporting team (and good advice) and a large network of active relationships. The entrepreneur in the startup phase of his or her business should expect to face numerous, often discouraging obstacles to adoption and success. And arriving at an appreciable success can take time. During this time period the entrepreneur may well be faced with doubts about the viability of his or her basic idea.

The challenge, while the startup entrepreneur is watching and waiting, is to determine if the project has enough quality and substance to continue expending time, effort and capital into it, or whether the viability just isn't there, and to write the expenditure to that point off as a sunk cost, and shift his or her focus to another project – to “scrub the mission” and proceed to another, unrelated project. Choosing whether or not to invest further into the project and allow time to be the determining factor of success is a critical decision.

There is so much to be said (and there are so many stories) of entrepreneurs and inventors who believed so fervently in the viability, importance and marketability of what they were doing that they just held their ground and kept on plugging away until the tides started to turn in favor of success. Then there are the untold stories of the hordes of aspiring inventors and entrepreneurs who mistook a lack of early-stage success for a lack of viability that they simply quit. In some cases, the decision to quit was warranted – in other cases (and we'll never be able to get any statistics on these), had the entrepreneur or inventor continued along the course, it might have caught on – or with some modification, it might have been a certain winner.

Things are not always that black and white. If the entrepreneur or inventor truly believes in the viability of the idea, and, upon discussion with some or his or her advisors, mentors and relationship contacts, gets some positive feedback about the idea, perhaps the best solution is to reframe or to re-package some aspect of the idea at issue instead of simply throwing away erroneously. Perhaps the idea, project, or invention is just not being represented in its most appealing fashion. Sometimes “tweaking” the presentation or packaging of the idea will accelerate its course to adoption and success.

As a startup entrepreneur, I would plead with you not to jettison an idea about which you are truly passionate. While I don't believe in wasting resources on an idea, project or invention which is simply not good, I believe that we believe in our ideas for a reason. Whether that reason is just a function of our own strong opinion or whether it is a manifestation of the collective conscientiousness, please give your idea, your dream a chance to flourish... and instead of abandoning something which could truly be ingenious, invest some time and solicit feedback regarding a potential reframing, repositioning or repackaging of your idea. It's far better to “tweak” some aspect of a brilliant idea (or its presentation) than to throw away an asset which may prove to be something of great utility to Humanity... or at least a market segment of it.

Startup entrepreneurs: You've put so much thought and passion into your idea, project or invention. Evaluate your situation very carefully before you write off your dream as a sunk cost. Your tenacity and audacity (these plus some creativity and a modifications) might well mean the difference between a slow start to a certain success or another contribution to the ever-increasing junkpile of great starts which were stillborn or aborted because the entrepreneur simply gave up and quit too soon.

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Stop Multitasking! Start Rotational Tasking

2015-07-07T00:06:00.001-04:00

Stop Multitasking! Start Rotational Tasking.

Make The Most Efficient Use Of Your Time

Master Your Professional Time Management

It seems that everybody is always multitasking (or, if you prefer, multi-tasking). This has become a broadly accepted business practice as well as a popular means of social relationship management. The situation, in reality, is quite lamentable – the ultimate result of most multi-tasking is a confused mess of partially (or shoddily) finished responsibilities, excessive (and highly unhealthy) stress and overall inefficiency. It is apparent that most Human Beings are only capable of doing a very limited amount of multitasking. At an organizational or enterprise level, the cumulative effect of multi-tasking is a breakdown in communications, management, problem-solving and goal attainment.

It's really quite simple. Multitasking generally requires a division or scattering of intellectual focus, which leads to predictably poor or unfinished results. Going further, the multi-tasking culture is creating a working environment that is more effort-focused and less results-oriented. Readers and followers of The Braintenance Blog, The Taking Command Blog and The Douglas E Castle Blog are familiar with this tendency and its negative trend in terms of both health and performance. Every project manager should become intimately familiar with using rotational tasking in place of multitasking. The greatest benefit of rotational tasking is that it permits steady focus on each of the tasks rather than a diffused (and ofttimes confused) focus – more like a glossing over – of a set of tasks.

Since time is your principal asset and a limited resource, rotational tasking is simply a better way than multitasking in terms of intelligent and efficient time management. And your professional and personal time management are critical to your quality of work and life.

Realistically, when you are confronted or faced with a number of tasks, instead of diving into the pool of them and reverting to you multitasking 'default mode', try to observe the following protocol if you'd like to actually accomplish a better quantity and quality of work [it helps if you can envision a sort of matrix table in your mind while you proceed through these steps]:

Step 1: Prioritize the tasks in terms of deadline. What needs to be completed first?

Step 2: Prioritize the tasks in terms of their relative importance. Which is most critical in terms of the quality of your performance and result?

Step 3: Begin rotational tasking to finish the whole set of tasks. “Rotational Tasking?” As I write this article I can hear you asking the rhetorical question,”What does he mean by Rotational Tasking?”

Simply organize your tasks in two lists, the first one being the deadline list, and the second being the “first things” first importance list. Go to the first list first, and commence work at full steam on the first project until your focus begins to wander. Then, go to the first item on the second list (assuming the two items are not the same task, in which case you would go to the second item on the second list), and commence work at full steam until your focus (and creative juices) begin to wander. Then go back to the first list (i.e., the deadline list), choose the second item and proceed with your work at full steam until you arrive at a natural fatigue point. Just continue this pattern, 'Lazy Susan style' until you've completed the full set of tasks. Congratulations – you are now rotationally tasking!

You will notice that you have actually made genuine progress toward the full-quality completion (in an incremental fashion) of several tasks, instead of slogging through a swamp of confusion that just refuses to disappear without a massive sacrifice in the quality of your performance. You might also notice that you are far less fatigued than you would normally be had you attacked the set of tasks through your ill-acquired habit of multitasking.

Rotational tasking will allow you to function far more efficiently and effectively than through either a linear approach (the “old school” approach of simply completing one task – no matter how fatigued you become and how much your focus eventually wanders – and then going onto the next) or a multitasking approach.

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Creating A Winning Business Plan

2015-07-02T18:17:00.001-04:00

Notice: Much of the above work below derives from information publicly available through the U.S. Small Business Administration (the SBA).

Your business plan is simply a written document that describes in detail how your new business is going to achieve its goals. A business plan will lay out a written framework from a marketing, financial and operational viewpoint. Sometimes a business plan is prepared for an established business that is moving in a new direction, or is in search of new capital. Your business plan is a compass to guide you, incrementally and categorically, to the achievement of your vision – And of course, in some cases, the document will be used as a selling tool to solicit the interest of prospective acquirors or financiers.

You've undoubtedly heard the truism that “If you fail to plan, then you should plan to fail”. And the best plans are the result of a group or team effort which is reduced to a writing.

A business plan includes a description of a company or small business, its services and/or products and how the business will achieve its goals. The plan includes the overall budget, current and projected financing, a market analysis and its marketing strategy approach. In a business plan, a business owner projects revenues and expenses for a certain period of time and describes operational activity and costs related to the business.

The idea behind putting together a business plan is to enable owners to have a more defined picture of potential costs and drawbacks to certain business decisions and to help them modify accordingly before implementing these ideas.

A business plan is also a road map that provides directions so that a business can plan its future and helps it avoid bumps in the road. The time you spend making your business plan thorough and accurate, and keeping it up-to-date, is an investment that pays big dividends in the long term.

Your business plan should conform to generally accepted guidelines regarding form and content. Each section should include specific elements and address relevant questions that the people who read your plan will most likely ask.

Generally, a business plan has the following components:

Title Page and Contents
A business plan should be presented in a binder with a cover listing the name of the business, the name(s) of the principal(s), address, phone number, e-mail and website addresses, and the date. You don't have to spend a lot of money on a fancy binder or cover. Your readers want a plan that looks professional, is easy to read and is well-put-together.

Include the same information on the title page. If you have a logo, you can use it, too. A table of contents follows the executive summary or statement of purpose, so that readers can quickly find the information or financial data they need.

Executive Summary
The executive summary, or statement of purpose, succinctly encapsulates your reason for writing the business plan. It tells the reader what you want and why, right up front. Are you looking for a $10,000 loan to remodel and refurbish your factory? A loan of $25,000 to expand your product line or buy new equipment? How will you repay your loan, and over what term? Would you like to find a partner to whom you'd sell 25 percent of the business? What's in it for him or her? The questions that pertain to your situation should be addressed here clearly and succinctly.
The summary or statement should be no more than half a page in length and should touch on the following key elements:

Business concept describes the business, its product, the market it serves and the business' competitive advantage.
Financial features include financial highlights, such as sales and profits.
Financial requirements state how much capital is needed for startup or expansion, how it will be used and what collateral is available.
Current business position furnishes relevant information about the company, its legal form of operation, when it was founded, the principal owners and key personnel.
Major achievements points out anything noteworthy, such as patents, prototypes, important contracts regarding product development, or results from test marketing that have been conducted.

Description of the Business
The business description usually begins with a short explanation of the industry. When describing the industry, discuss what's going on now as well as the outlook for the future. Do the necessary research so you can provide information on all the various markets within the industry, including references to new products or developments that could benefit or hinder your business. Base your observations on reliable data and be sure to footnote and cite your sources of information when necessary. Remember that bankers and investors want to know hard facts--they won't risk money on assumptions or conjecture.

When describing your business, say which sector it falls into (wholesale, retail, food service, manufacturing, hospitality and so on), and whether the business is new or established. Then say whether the business is a sole proprietorship, partnership, C or Sub chapter S corporation. Next, list the business' principals and state what they bring to the business. Continue with information on who the business' customers are, how big the market is, and how the product or service is distributed and marketed.

Description of the Product or Service
The business description can be a few paragraphs to a few pages in length, depending on the complexity of your plan. If your plan isn't too complicated, keep your business description short, describing the industry in one paragraph, the product in another, and the business and its success factors in two or three more paragraphs.

When you describe your product or service, make sure your reader has a clear idea of what you're talking about. Explain how people use your product or service and talk about what makes your product or service different from others available in the market. Be specific about what sets your business apart from those of your competitors.

Then explain how your business will gain a competitive edge and why your business will be profitable. Describe the factors you think will make it successful. If your business plan will be used as a financing proposal, explain why the additional equity or debt will make your business more profitable. Give hard facts, such as "new equipment will create an income stream of $10,000 per year" and briefly describe how.

Other information to address here is a description of the experience of the other key people in the business. Whoever reads your business plan will want to know what suppliers or experts you've spoken to about your business and their response to your idea. They may even ask you to clarify your choice of location or reasons for selling this particular product.

Market Analysis
A thorough market analysis will help you define your prospects as well as help you establish pricing, distribution, and promotional strategies that will allow your company to be successful vis-à-vis your competition, both in the short and long term.

Begin your market analysis by defining the market in terms of size, demographics, structure, growth prospects, trends, and sales potential. Next, determine how often your product or service will be purchased by your target market. Then figure out the potential annual purchase. Then figure out what percentage of this annual sum you either have or can attain. Keep in mind that no one gets 100 percent market share, and that a something as small as 25 percent is considered a dominant share.

Your market share will be a benchmark that tells you how well you're doing in light of your market-planning projections.

You'll also have to describe your positioning strategy. How you differentiate your product or service from that of your competitors and then determine which market niche to fill is called "positioning." Positioning helps establish your product or service's identity within the eyes of the purchaser. A positioning statement for a business plan doesn't have to be long or elaborate, but it does need to point out who your target market is, how you'll reach them, what they're really buying from you, who your competitors are, and what your USP (unique selling proposition) is.

How you price your product or service is perhaps your most important marketing decision. It's also one of the most difficult to make for most small business owners, because there are no instant formulas. Many methods of establishing prices are available to you, but these are among the most common.

Cost-plus pricing is used mainly by manufacturers to assure that all costs, both fixed and variable, are covered and the desired profit percentage is attained.
Demand pricing is used by companies that sell their products through a variety of sources at differing prices based on demand.
Competitive pricing is used by companies that are entering a market where there's already an established price and it's difficult to differentiate one product from another.
Markup pricing is used mainly by retailers and is calculated by adding your desired profit to the cost of the product.

You'll also have to determine distribution, which includes the entire process of moving the product from the factory to the end user. Make sure to analyze your competitors' distribution channels before deciding whether to use the same type of channel or an alternative that may provide you with a strategic advantage.

Finally, your promotion strategy should include all the ways you communicate with your markets to make them aware of your products or services. To be successful, your promotion strategy should address advertising, packaging, public relations, sales promotions and personal sales.

Competitive Analysis
The purpose of the competitive analysis is to determine:

the strengths and weaknesses of the competitors within your market.
strategies that will provide you with a distinct advantage.
barriers that can be developed to prevent competition from entering your market.
any weaknesses that can be exploited in the product development cycle.

The first step in a competitor analysis is to identify both direct and indirect competition for your business, both now and in the future. Once you've grouped your competitors, start analyzing their marketing strategies and identifying their vulnerable areas by examining their strengths and weaknesses. This will help you determine your distinct competitive advantage.

Whoever reads your business plan should be very clear on who your target market is, what your market niche is, exactly how you'll stand apart from your competitors, and why you'll be successful doing so.

Operations and Management
The operations and management component of your plan is designed to describe how the business functions on a continuing basis. The operations plan highlights the logistics of the organization, such as the responsibilities of the management team, the tasks assigned to each division within the company, and capital and expense requirements related to the operations of the business.

Financial Components of Your Business Plan
After defining the product, market and operations, the next area to turn your attention to are the three financial statements that form the backbone of your business plan: the income statement, cash flow statement, and balance sheet.

The income statement is a simple and straightforward report on the business' cash-generating ability. It is a scorecard on the financial performance of your business that reflects when sales are made and when expenses are incurred. It draws information from the various financial models developed earlier such as revenue, expenses, capital (in the form of depreciation), and cost of goods. By combining these elements, the income statement illustrates just how much your company makes or loses during the year by subtracting cost of goods and expenses from revenue to arrive at a net result, which is either a profit or loss. In addition to the income statements, include a note analyzing the results. The analysis should be very short, emphasizing the key points of the income statement. Your CPA can help you craft this.

The cash flow statement is one of the most critical information tools for your business, since it shows how much cash you'll need to meet obligations, when you'll require it and where it will come from. The result is the profit or loss at the end of each month and year. The cash flow statement carries both profits and losses over to the next month to also show the cumulative amount. Running a loss on your cash flow statement is a major red flag that indicates not having enough cash to meet expenses-something that demands immediate attention and action.

The cash flow statement should be prepared on a monthly basis during the first year, on a quarterly basis for the second year, and annually for the third year. The following 17 items are listed in the order they need to appear on your cash flow statement. As with the income statement, you'll need to analyze the cash flow statement in a short summary in the business plan. Once again, the analysis doesn't have to be long and should cover highlights only. Ask your CPA for help.

The last financial statement you'll need is a balance sheet. Unlike the previous financial statements, the balance sheet is generated annually for the business plan and is, more or less, a summary of all the preceding financial information broken down into three areas: assets, liabilities and equity.

Balance sheets are used to calculate the net worth of a business or individual by measuring assets against liabilities. If your business plan is for an existing business, the balance sheet from your last reporting period should be included. If the business plan is for a new business, try to project what your assets and liabilities will be over the course of the business plan to determine what equity you may accumulate in the business. To obtain financing for a new business, you'll need to include a personal financial statement or balance sheet.

In the business plan, you'll need to create an analysis for the balance sheet just as you need to do for the income and cash flow statements. The analysis of the balance sheet should be kept short and cover key points.

Supporting Documents
In this section, include any other documents that are of interest to your reader, such as your resume; contracts with suppliers, customers, or clients, letters of reference, letters of intent, copy of your lease and any other legal documents, tax returns for the previous three years, and anything else relevant to your business plan.

Some people think you don't need a business plan unless you're trying to borrow money. Of course, it's true that you do need a good plan if you intend to approach a lender--whether a banker, a venture capitalist or any number of other sources--for startup capital. But a business plan is more than a pitch for financing; it's a guide to help you define and meet your business goals.

Just as you wouldn't start off on a cross-country drive without a road map, you should not embark on your new business without a business plan to guide you. A business plan won't automatically make you a success, but it will help you avoid some common causes of business failure, such as under-capitalization or lack of an adequate market.

As you research and prepare your business plan, you'll find weak spots in your business idea that you'll be able to repair. You'll also discover areas with potential you may not have thought about before--and ways to profit from them. Only by putting together a business plan can you decide whether your great idea is really worth your time and investment.

If yours is a startup business and you'd like to download a high-quality template and instructions to follow for the preparation of your own business plan, simply click HERE.

If yours is an existing and established business and you'd like to download a high-quality template and instructions to follow for the preparation of your own business plan, simply click HERE.

Notice: Much of the above work derives from information publicly available through the U.S. Small Business Administration (the SBA).

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Your Company's Burn Rate - Budget And Capitalize Successfully

2015-06-25T00:46:00.000-04:00

It may well take money to make money, but it requires intelligence and vigilance not to lose it. Too many entrepreneurial enterprises and crowdfunded projects suffer from the initial "high" of newly-found capital, and spend quickly and unwisely. Having a detailed budget at the outset -- a budget that incorporates your enterprise's "Burn Rate" of capital per month -- is essential to enable your business to survive and thrive.

As a word (in advance) of advice, establish a realistic application of proceeds and a month-to-month budget prior to seeking any infusion of capital. For the well-being of your company, strategic and tactical budgeting are disciplinary tools to keep your company in proper operating condition.

The burn rate is that amount of funds which your company must spend per month (i.e., necessary fixed costs, without any allowance made for revenues -- a "zero revenue" assumption) in order to continue its operations.

Be certain that while you are calculating your monthly burn rate that you do not include sunk costs relating to pet projects. Sunk costs are those costs which tend to relate to pet projects which are being treated as investments, but which are really cases of "throwing good money after bad". Don't make a provision for sunk costs -- simply identify them and stop incurring them by accepting (although this may be difficult emotionally) that they are merely an accumulation of waste -- stop feeding failed projects and cut your losses as early in your company's evolution as is possible.

After you've calculated your monthly capital burn rate, divide it into the amount of available capital (cash from investors, credit lines and from accumulated earnings) and the result produced will be the number of months that your company can sustain itself without generating any revenues. This computation yields your company's estimated lifespan if it were to generate no revenues.

Before commencing any negotiations for capital (through debt, equity, or otherwise), know your company's anticipated burn rate and multiply it by the number of months forecasted to be required prior to your company's initiating an adequate contribution margin (this latter number can be obtained by taking your company's price per unit sold, reducing that number by direct variable costs [such as direct labor and direct materials, as applicable] and multiplying that result by the number of units sold in a month) and you will have produced a conservative estimate of how much capital your company will require to sustain its existence until the contribution margin is fully adequate to cover the burn rate amount.

Some other important considerations and distinctions about your company's capital burn rate:

1) Gross burn rate is the total amount of money you are spending per month. Net burn rate is the amount of money you are losing per month. So if your costs are $500,000 per month and you have $350,000 per month in revenue then your net burn (500-350) is equal to $150,000. The reason that most investors quickly zero in on net burn is that if you have $3 million in your bank account and have a net burn of $150,000 per month you have more than 18 months of cash left provided your net burn stays constant. Conversely if you’re burning $600,000 per month (yes, some companies do) then you only have 5 months of cash left.

2) The answer is more complex than just Gross Burn Rate vs. Net Burn Rate. There may well be a trade-off between growth & profits.

Gross margin (GM) is the amount of profit you make per sale of your product or service taking into account your total costs of selling that product or service. If you have a very low gross margin (10-30%) it can be very hard to build a large, scalable business because you need to make a lot of sales to cover your operating costs.

Some industries work well with players who have low gross margins but these tend to be industries with very large, well established players and hard for new entrants to compete. In startup world low GM almost always equals death which is why many Internet retailers have failed or are failing (many operated at 35% gross margins).

Many software companies have > 80% gross margins which is why they are more valuable than say traditional retailers or consumer product companies. But software companies often take longer to scale top-line revenue than retailers so it takes a while to cover your nut. It’s why some journalists enthusiastically declare, “Company X is doing $20 million in revenue” (when said company might be just selling somebody else’s physical product) and think that is necessarily good while in fact that might be much worse than a company doing $5 million in sales (but who might be selling software whose sales are extremely profitable).

3) In doing your burn rate calculations, it may well be advisable to add a percentage-based "contingency" or "reserve" factor to the base burn rate. I typically take the burn rate as it is calculated, and multiply it by a factor of 1.10, which represents a contingency or reserve factor of 10%. While the burn rate will appear slightly higher, it is reasonable and responsible to provide for contingencies. If these surplus funds are not needed, they can be allowed to accumulate as cash or in some other liquid investment to be used when as and if necessary. I advise you to err on the side of caution.

Every fiscally responsible entrepreneur or executive should know his or her company's burn rate; further the burn rate should be recalculated every several months using a zero-based budgeting approach. This is because fixed cost structures and amounts expended per month do (despite their name) tend to change in a sort of stepped function at certain critical levels of revenue production.

Thank you, as always for reading me. Please visit our GEI website at the following address: http://GlobalEdgeInternational.com and visit our official blog as well at http://GlobalEdgeInternational.blogspot.com.

Douglas Castle

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Joint Ventures : Keys To Accelerated Business Growth

2015-06-21T15:58:00.000-04:00

Well-assembled synergistic Joint Ventures can truly be the key to accelerated growth and success for companies wishing to build rapidly without having to raise or expend large sums of capital through the conventional equity and debt fundraising approaches. Joint ventures are also a wonderful way of rapidly expanding profitability without sacrificing equity or operational control of your business. But what, exactly is a joint venture, and what is unique about its structure?

A joint venture (“JV”) is a special business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it. Because of its specificity, a JV is quite different from a full-scale general partnership. Joint ventures can be domestic or international -- in the current economy, international joint ventures are becoming increasingly popular. It is also becoming more the norm for a company to have multiple joint venture arrangements with providers of different abilities or resources.

However similar to a general business partnership which involves a broad business undertaking and a much greater level of involvement and intimacy between the parties involved (a partnership is a monogamous marriage while a JV is a more highly-targeted and limited relationship in terms of both its parties and its activities), the venture is its own entity, separate and apart from the participants’ other business interests.

Although JVs represent an intelligent way to pool capital and expertise and reduce the exposure of risk to all parties involved, they do present some unique challenges as well. For instance, if party A comes up with an idea that allows the JV to flourish, what portion of the profits does party A get? Does the party simply receive a portion based on the original investment pool or is there recognition of the party’s contribution above and beyond the initial stake?

A joint venture arrangement and the agreement which defines and documents the contributions, obligations, rewards and sharing of revenues (not a sharing of profits, as in a full general partnership) by and among the parties requires a careful vetting of the participants, a great deal of initial dialogue between or amongst them and some negotiation of the fine but crucial details of the intended relationship’s purposes and limitations.

One of the most unique aspects of joint ventures aside from their inherent allowance for creativity in structure, is that they can exchange valuable services in lieu of exchanging or investing cash capital. For example, in a joint venture between a startup company and a well-established, larger enterprise, the startup company may benefit by having the administrative, operational and back office capability of its more mature counterpart [and the startup is able to make use of these capabilities without having to capitalize itself with external funds and incur the fixed and recurring costs associated with running its operations].

In the arrangement described in the previous paragraph, the established company may be adding to its potential profitability (and perhaps product or service diversity) by leveraging its existing fixed costs -- this represents growth without incurring additional fixed or variable costs. This increase in operating leverage (or the deeper exploitation of recurring fixed costs endemic to operating a large-scale established business) benefits both companies which are the parties to the joint venture.

In another type of case, a company which may wish to expand the market for its products or services overseas may choose to enter into a joint venture with an overseas company having well-established market distribution channels in that target country in order to increase sales and diversify its customer market base. The first company manufactures and distributes its products domestically, but it expands its markets and market share by entering into a series of international joint ventures with established distribution partners in each of the countries into which it wants to gain access.

In yet another case, a company which is extremely proficient at marketing and which also has a large captive customer base may choose to enhance and increase its supply chain efficiency by having its goods manufactured through a joint venture with an overseas plant that is a skilled manufacturer with a well-established logistic delivery and support system. In this example, the joint venture is just a more intimate means of outsourcing.

A joint venture arrangement and the agreement which defines and documents the contributions, obligations, rewards and sharing of revenues (not a sharing of profits, as in a full general partnership) by and among the parties requires a careful vetting of the participants, a great deal of initial dialogue between or amongst them and some negotiation of the fine but crucial details of the intended relationship’s purposes and limitations.

A well-organized and expert management consulting firm not only locates, pre-qualifies and engages in the selection of a possible joint venture candidates for your specific project and your specific need, but actively participates in intermediating and moderating the dialogue, the negotiation process (as your representative or limited agent) and drawing up [subject to full review by the Client’s legal counsel and tax experts] a list of items to be included in the joint venture agreement.

Your management consulting firm has an ongoing maintenance and monitoring responsibility after the deal has been signed and the operation of the joint venture put into motion by intermediating, as required, between or among the parties to the joint venture or ventures.

In many cases, these special observation and communication activities are ultimately responsible for the success of the joint venture, the accomplishment of its specified mission, and the tone of the working relationship between the parties, which may be from varied countries with varied cultures and customs. Your consultant may even need to provide translators and interpreters as required in order to be certain that there is never a misunderstanding or breakdown in clear communications between multicultural parties to an international joint venture arrangement.

A well-conceived joint venture with the right participants and terms of relationship is the ideal way to accelerate growth and bolster profitability while allowing each participant to simply continue to do that which it does best (i.e., continued specialization and the efficiency that emanates from specialization) and to leverage that particular strength. It also saves each venturer from the potentially costly trial and error process of developing all of the necessary capabilities for success in-house. And most importantly, a joint venture allows for each of the participants to continue to operate in relative autonomy.

As the capital markets continue to remain strained and volatile, and as international consumerism and contracting are on the rise, you and your company may expect to see a great deal more activity in terms of joint venture formation than in the investment banking and venture capital sectors.

Douglas E. Castle for GEI and The Global Edge International Blog

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Management Consulting: Choosing The Right Firm -

2015-06-12T20:50:00.001-04:00

Most companies at any stage of their growth (or even in the event of their decline) can be benefited substantially by retaining the services of the right management consulting firm. Management consulting firms are, generally speaking, in the practice of advising and assisting businesses to improve their performance in any given set of circumstances.

Consultancies operate primarily through an analysis of a client company's situation; the application of experience and expertise in formulating a tactical or strategic plan for improving the status quo; and, by proactively overseeing the implementation of the proposed plan of action until the desired result is obtained. It is in this last aspect of a typical management consulting engagement where even the most notable and established consulting firms tend to fall short.

Consultancies may provide organizational change management assistance, development of coaching skills, process analysis, technology implementation, strategy development, financing, marketing and branding, merger and acquisition or operational improvement services. Management consultants often bring their own proprietary methodologies or frameworks to guide the identification of problems and to serve as the basis for recommendations for more effective or efficient ways of performing work tasks.

In choosing the right management consulting firm, the following factors must be given serious consideration: objectivity, expertise, experience, problem-solving orientation, scalability of solutions, client-centric focus and affordability. In considering all of these factors, you may well find that some of the older, larger management consulting firms may not be the ideal match for your company's needs.

In an ideal client-consultant relationship, the client and the consultant can both gauge the return on the consulting investment (the “Consulting ROI”) by dividing the incremental improvement (produced by the implementation of the consultant's advice and efforts) by the total billings of the engagement. The greater this return, the more successful the engagement.

In making this evaluation, it should be borne in mind that the client's cooperation is an integral component of any successful engagement – and further, that the consultant can only hope to exert limited control over the client's compliance.

Returning to the factors for selection of a management consulting firm as set forth earlier, we should take a closer look at each factor, the reasons for its significance, and how to get a preliminary “reading” on whether or not your prospective selection has the necessary attributes to warrant your serious consideration:

Objectivity:

When retaining the services of a management consulting firm, be certain to choose one that will view your company objectively (i.e., a firm which: has no ties to any of management or employees; a firm which is not too narrowly specialized in your vertical or technical industry; and a firm which does not have a conflict of interest where it may be doing work for one of your direct or prospective competitors).

Expertise:

Look for expertise (among the resumes of the management consulting firm's personnel) in the areas where you believe that your company needs to focus. Don't look for narrow technical expertise – look for expertise in the areas of business discipline where your firm may need shoring up, such as marketing, branding, manufacturing, strategic planning, financial restructuring, strategic planning, dispute resolution, team-building, risk management, etc. Business is business, whether it is nanotechnology or fertilizer packaging.

Experience:

While expertise is quite important, there can be no substitute for experience in the various business disciplines – especially if that experience centers around a particular area of expertise across a broad spectrum of industry sectors. Some of the best small- to medium-sized management consulting firms are comprised of a group of experts (in different business disciplines) who are well-seasoned with the wisdom that only experience can confer.

Problem-Solving Orientation:

When requesting the services of a management consulting firm, your company is generally not looking for an academic or operational study – your company, as most, is usually looking for pragmatic, real-world solutions to suspected or known problems. Your company is seeking actionable findings. If your choice of management consulting firm is wrong, you will wind up with a tremendous amount of information, usually beautifully bound and presented. But is the information focused on solving problems? Is the information instructive and directly actionable? Most of all, will the firm that you select assist you directly in the implementation of its suggested course of action? Most firms fall short when it comes to distilling their information into a tightly-focused, streamlined actionable agenda, just as they are prone to fall short when it comes to “hands-on” assistance in the implementation phase.

Scalability Of Solutions:

Solutions to problems encountered by your company must be accommodating of your company's size of operation. If the solutions presented by your selected management consulting firm are based upon a framework and assumptions that are too large or too small for the existing size of your business, they can be more harmful than helpful. Scalability of solutions, i.e., suggestions and plans to fit the present size and immediate needs of your firm, is a critical component of a successful consulting engagement. Oftentimes, a large management consulting firm paired with a young, growing company makes for a poor match where scalability of solutions is concerned. As an added note, scalability is as essential to realistic implementation as realistic implementation is to a successful outcome. When it comes to management consulting firms and to proposed courses of action, one size does not fit all.

Client-Centric Focus:

If the management consulting firm that you are contemplating engaging spends more time touting its own accomplishments and reputation than examining your needs, consider this to be a negative indicator. While an allowance must be made for a certain amount of salesmanship, a client-centric management consulting firm will inundate you with requests for information and question you extensively.Then, they will make careful note of your information and answers and reiterate or paraphrase them to you, just to be certain that they understand your needs so that they may sculpt them into the scope of your engagement. A firm that does far more talking than listening and observing is probably not client-centric. For those of us who are professionals in management consulting there are three understood rules: 1) know your client; 2) understand exactly what your client would like for you to focus on; and 3) be certain that the scope of your engagement is built around your prospective client company's needs and objectives.

Affordability:

Cheaper is not necessarily better or worse. Your company must be realistic when it comes to its budget for consulting, and be fully candid with any prospective candidate management consulting firm about budgetary constraints, as well as time constraints. While some of the largest consulting firms may be very inflexible in terms of their hourly rates and demands upon your limited budget, some of the more contemporary small- to middle-sized consultancies may be willing to defer a portion of their billings and/or take part of their compensation on a contingent basis geared to the occurrence of some successful event.

If a consulting firm just seems too expensive for your budget, and they cannot work with you in terms of pricing, you may well be speaking to the wrong management consulting firm. In the current economy, management consulting firms need to be creative when it comes to their pricing if they wish to remain in business. After all, management consulting is a business just as manufacturing or retailing. Businesses must be more flexible and creative in a difficult economy or when faced with a client base having special budgetary needs.

As of June 1^st, 2015, some of the better-known management consulting firms having a presence in the United States or the United Kingdom (according to Wikipedia) included the following [the author of this article does not necessarily endorse these firms, the list is not exhaustive, and the firms are merely listed in alphabetical order]:

ABeam, A.T. Kearney, Accenture, A&G Management Consulting, AlixPartners, Altran, Arthur D. Little, Avasant, Avascent, Bain & Company, BDO Consulting, Bearingpoint, Berkeley Research Group, LLC, Booz Allen Hamilton, Boston Consulting Group, Capco, Capgemini Consulting, CGI, Cognizant Technology Solutions, Collinson Grant, Computer Sciences Corporation, Corporate Executive Board, Deloitte Consulting, Detica, Elix-IRR, Ernst & Young, FTI Consulting, Grant Thornton, Hay Group, HCL Axon, Hewitt Associates, Hitachi Consulting, Horváth & Partners, HP Enterprise Services, Huron Consulting Group, IBM Global Business Services, Ikon Marketing Consultants, Imdad logistics, IPL Information Processing Limited, ITN Consulting, KPMG, Kurt Salmon, L.E.K. Consulting, Logica, Marsh & McLennan Companies, Matrix Knowledge Group, McGladrey, McKinsey & Company, Mercer (consulting firm), Mitchell Madison Group, Monitor Group, Mott MacDonald, Navigant Consulting, Oliver Wyman, PA Consulting Group, PricewaterhouseCoopers, Protiviti, PRTM, Qedis Consulting Ltd, QualPro, Rambøll Management, Roland Berger Strategy Consultants, The Saint Consulting Group, Sapient, Schlumberger Business Consulting, SDG Group, Simon-Kucher & Partners, Slalom Consulting, SM&A, Strategy& (formerly Booz & Company), Tata Consultancy Services, Tefen, The Burke Group, Towers Watson, TQMI Ltd, Walter Rhodes, West Monroe Partners, WS Atkins PLC

Many of the above-listed management consulting firms are very specialized in the nature of the services that they provide. Many tend to be centered around accounting, IT, research, financial analysis and other vertical areas of expertise. While this may be seen as positive (and may actually be desirable in certain cases), much can be said in favor of multi-specialty firms, especially if your company is a relatively young or rapidly-growing enterprise. By and large, diversification of expertise is generally a positive in management consulting companies which serve a client base of young entrepreneurial enterprises and small- to middle market-sized firms.

Douglas Castle

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