A friend of mine who is not a banker, yet has been involved in the financial world and is an educator made this comment to me. I think it’s great and worth sharing.

The quote has to do with predatory practices, and with the financial reform taking place, predatory lending is a focal point.

‘I hate the word “predatory” with anything related to economics, as it sort of absolves the “victimized individual” of responsibility for being stupid…’ MW

Predatory lending has a hype factor built into it as well. Lack of knowledge though is the real culprit; that’s why I’ve written “Barking With The Big Dogs”.

Quotes To Share: Predatory Practices is a post from: TOPIX To Share

One of the biggest complaints about health care is costs. With the new health care bill, the talking points from the ones who want it are about lower costs. Talking points coming from the side that does not want the health care bill are about higher costs the new laws will create. In the end, all consumers want lower costs.

From business practices and seeing how competition works, competition leads to lower costs and innovation, which from a practical side won’t happen with the bill since competition, limited services, etc. are lacking and the government wants control.

In reality, efficiency is will lead to lower costs and can be done by both large and small businesses. I’ll get back to efficiency in just a minute, but for now. Let’s address something not in the health care reform. Lawsuits. (If we are going to fix the system, fix it all.)

No one wants to be sued, but apparently there is no such thing as an accident and everyone is to blame; at least that is a big perception of lawyers. Pharmaceutical and doctor practices are being reformed, but not the legal profession. Therefore, to go see a doctor, a referral must be given and endless forms to sign are necessary to “CYA” (for both liability and benefits purposes for instance).

However, when discussing referrals, this has happened to me twice!

First, when I had symptoms, I got all over the internet and discovered what I needed surgery for last year.

When I went to the doctor to describe the problem and what needed to be done, the doctor told me I had self-diagnosed myself very well. Okay, I don’t really have a problem getting a referral in this case, because I did want the doctor’s opinion to make sure what I had was right and was going to see the correct surgeon.

Next, a few weeks ago, I blew out my knee. Immediately I knew what happened. My knee was hurt in a big way. However, because I was out of town, my only choice was go to the emergency room and the time was during the evening or after hours. I didn’t mind going there, because I needed some help quickly.

This time, after X-rays, the doctor told my I had a knee strain, and my ligaments were strong, but gave me a referral to a specialist as well.

Once, again I got on the computer and did my research. I was positive the ACL was gone and maybe another ligament too. (Ligaments do not show up on X-rays.)

When I got home, I called my doctor, but couldn’t get in so I used the referral from the emergency room to schedule an appointment with a specialist. I also had to go get a referral from my GP doctor anyway for insurance purposes too.

After having all of the steps approved, I got to proceed. Then, after having a MRI, the ACL was torn and so was a meniscus.

Here’s the deal though and the point of the story.

I had to get a referral from a doctor to see a knee specialist when I knew I had a knee problem in the first place!

Without every looking at the internet, I knew the problem was in my knee, not my stomach, heart, head, ears, throat, etc. However, regarding my knee, the GP could only speculate since he couldn’t do the MRI anyway and the emergency room doctor was flat out wrong.

When I’ve had a blowout on my car, I didn’t have to go to the car dealer to get a referral to buy a new tire at the tire store, I knew what was wrong. The tire was gone. Therefore, when something is so obvious, why would I not be allowed to go to the source to fix the problem?

When I knew the knee was damaged, why not go directly to a knee and joint specialist?

With the first surgery, there were more possibilities and going to the doctor for confirmation is a wise thing to do. And sure, there are times when steps need to be followed, such as fraud and wasted time, but doctors are not infallible and all knowing, they are human too.

Speaking of wasting time, is a runny nose really an emergency worth wasting the doctors and nurse’s time and other people’s money just to avoid the GP?

The bottom line is efficiency will lower cost. Government bureaucracy sure won’t. Going to the doctor should eliminate steps and can do so, but when the obvious is at hand, why not get there the quickest way and save everyone money?

And one last thought on referrals; if I have to go see a doctor in my network, I know which knee doctors are available – they are on the list. I’m not generally going to get a referral outside my network. When having repairs done to the car, the insurance company says which auto body shops are on the list too. No referrals are necessary.

A little consistency and efficiency can make a huge financial difference; and referrals from customers (patients) who have had medical issues worked on would seem to carry more weight from a consumer standpoint. After all, when people recommend or do not recommend a business, the company can improve or someone else will.

Health Care: Why Get A Referral From The Auto Dealership For A Blowout To Get A New Tire? is a post from: TOPIX To Share

Marketing is pretty simple. Sales. Well, not exactly.

I have spoken with many people, from business owners to HR personnel, about the subject of marketing. Many of the people in our conversations have a narrow view of marketing and generally relate marketing to sales.

Now, I would have to say marketing ranks at the top of any subject; and yes, nothing happens without sales.

Without sales, businesses do not need inventory, computers, delivery drivers, stockers and cashiers, computers, engineers, IT departments, accountants, etc. Yet the service of professionals and workers is not limited to business, nor is sales.

Sales must happen in non-profit business, schools and government institutions. These entities must solicit services or products to generate income. To give an example, the University of Texas at the Permian Basin offers a free, four-year education. Dillards, Best Buy and other retailers offer free services too. The idea is to get customers. Customers (students or the public) will spend money.

Other ways to solicit money is to ask for donations, investment money or get a loan. Even getting a loan requires pitching one’s self to the banker by showing personal financial statements or business plans in order for the banker “buy” your idea or needs. If you have ever been on a date or made a marriage proposal, you dressed up (or to the occasion) to promote yourself and asked the other person to go with or marry you.

As you can see, sales is in everything and eventually to close the deal, you must ask for the business, so-to-speak.

Going beyond sales, customer service and promotions, marketing includes more. Obviously, promotion includes sales and advertising, but also give-a-ways, rebates, etc. In order to know what amount of money or items can be given away or discounted, pricing is part of marketing and includes accounting functions.

The accounting side will take into consideration all costs, such as product costs, freight, commissions, rent, cost per mile (for delivery), utilities, depreciation, etc. in order to project the necessary amount of sales in relation to the changing margins from discounts and markup in order to break even or meet a desired financial goal. Therefore, to understand marketing, you must also understand accounting.

Moving from accounting and the pricing side of marketing, the next is place or distribution. The place is not just at the corner of 1st and Main, selling locally, but also includes the distribution of the products. Will you sell locally or regionally? Where does the supply come from? Imports, manufacturers, distributors, etc. Even manufactures must find their sources of materials, just as a bank has a pipeline for money and distributes throughout a channel. Speaking of distribution, will the products come by rail, LTL (less than truck load), ground or air service, etc. Do you buy by the box, case, or truckload. What are the dimensions of the container to know how the shipping will be priced so you can figure your costs? Service companies also distribute their products – fax, phone, e-mail, Fed Ex, online, etc. Can you download it? To sum it up, the place is a physical location but also a distribution method.

From distribution, pricing and promotion, the obvious thing to sell is the product itself. Is the product physical or a service. What makes one product better than another? Does the product satisfy a need or want and/or create a solution to a problem? Is there a demand for the product?

All products have life cycles…the initial or starting point, growth, maturity and decline. As a buyer once told me, “it’s not a sale unless it’s a saleable item” and a supplier stated, “don’t make my close-outs your close-outs”. Good points.

Ultimately though nothing happens without sales, but sales is just one aspect of marketing.

How well do you know marketing? is a post from: TOPIX To Share

I was listening to a buyer ask the saleman, “Do I get a special non-profit rate?” to which the salesman replied yes.

That question has always been intriguing for a couple of reasons.

First, if I’m in line behind the customer getting the special rate for the same exact thing, why should he get a discount and not me?

We but the same things; we buy the same quantities, etc.

Just because a company says they are non-profit does not mean they do not make money. Non-profit companies have to make a profit in order to survive.  Without a profit on their products and services, payroll can’t be met and the utilities can’t be paid.

I’ve done business plans for non-profit companies and they buy products and resell them at higher prices, which is the gross profit.  Service prices are figured on the amount of people they serve and breakeven points on expenses too.

In reality, a big difference between the two business structures is a non-profit cannot pay shareholders; therefore, a solution is to pay more in salaries, which which is an expense, to disburse the profits.

Next, non-profits do not like to pay taxes.  Thus, the reason to be a non-profit is for tax status, not a goal for losing money.  The irony is for-profit companies pay taxes and can be a financial source for non-profit companies grant money, or subsidies.

Ironic maybe, funny – no.

The non-profit company wants lower costs and tax exemptions, but who doesn’t?  What struggling business wouldn’t want subsidies?  (The ones who realize their taxes pay them, I guess.)  Receiving lower prices and taxes exemptions can allow the non-profit company to stifle or eliminate competition – the very companies paying taxes in the first place.

The next time I see something like this happen, I’ll be seeing the manager of the company for the last time because taxes subsidize many things and people, and so do my purchases.

How To Get Lower Costs And Tax Exemptions is a post from: TOPIX To Share

With all of the talk about jobs, the results of Obama’s efforts are not working.  In addition, massive taxes are on the way, Citibank has government ownership; we all know what GM stands for since the government took them over; bank and financial institutions, Obamacare, etc.  The list could go on and on.  After the inauguration, Obama has delivered on his “change” promises, that’s for sure, and reshaping America is happening at breakneck speed.

Is small business left behind?  Apparently since they are not unionized, I would say yes.  But there is more.

Take a look at the video I posted with an interview from the National Federation of Independent Business (NFIB) as well as read the letter from the Chamber of Commerce by clicking on the following link.  Chamber

An Open Letter To Obama From The Chamber of Commerce is a post from: TOPIX To Share

Thinking business, I was watching the commentary and interview of Bill Dunkelberg, National Federation of Independent Business (NFIB) Chief Economist. Obviously, jobs, taxes, Obamacare, etc. are very important for everyone; however, the video itself is not so popular. The video only has 291 views at the time I posted it.

Watch it anyway.

Then watch “Two Important Videos For Different Reasons…Part 2″

Two Important Videos For Different Reasons…Part 1 is a post from: TOPIX To Share

Take a look at how an American small business used a label to get a message out. You won’t see this on the large, corporate level and the creativity of small business sometimes has an advantage. Take a look at the English version of the label as compared to the one for the people in France.

How To Be Creative As A Small Business is a post from: TOPIX To Share

I was going over the financial feasibility study with a client today. When the conversation turned toward financial ratios, I brought up return on equity as I usually do.

However, something eye opening hit me during the conversation.

Before I talk about my discovery, let me mention topics we hit on first. You’ll want to pay attention this today if you are interested at all in making money on your investments, etc. If not, both  you and future generations to come will miss out too.

When determining if the business was worth doing, we looked at cash flow. Cash flow statements are very easy to understand and it’s this simple…money coming in versus money going out. You can look at a personal checking account just as a business looks at their statements.

Next we discussed income statements. Income statements show business the items such as depreciation of assets on and other tax write-offs which reduce the taxable amount of income. The income statement, however, does not affect cash flow – money spent does. The income statement gives an idea about the net profits which are taxable.

From there, we reviewed return on equity. A difference between return on equity and return on investment is different, but in short, the return shows how hard the money is working. In just a minute, I’ll demonstrate some simple math; but first, let’s look at the Rule of 72 as it relates to how hard your money is working.

The Rule of 72 will tell you how fast the money will double in value.

To figure the time, you will only need the calculator between your ears. If you know the rate of return, which is mentioned on the feasibility study ratios page – or a CD at the bank, simply divide 72 by that number. The answer will be the number of years for your money to double.

For example, if you earn 6%, take 72 and divide it by 6. The answer is 12. Your money will double every 12 years.

Now comes the eye opening part.

I was looking at a money market account paying .01%. That’s right, 1/100th of a percent. At this rate, money will double every 7,200 years!

Without reinvesting the interest earned and simply setting it aside, in order to double the money, 11,920 years will pass.

Looking at interest rates on CD’s at .25%, which are not uncommon rates, money will double in 288 years. Can you and your family wait this long? Mine can’t.

Don’t blame banks for offering low rates, there is more to the story and you can read about it in “Barking With The Big Dogs” which is soon to be released.

How well will you do? OMG, you might want to consider this! is a post from: TOPIX To Share

Although I am not a soccer (football in other parts of the world such as England, Brazil, Portugal, Spain or Germany) fan, the World Cup is huge and the players footwork can be mesmerizing.

What’s interesting about Nike’s Football “Write The Future” video is the “what if” happens in life.

What if someone steals the ball? Do you give up or get back in the game? What future do you write for yourself? Is the course of history changed in a moment?

It’s cool to see in the how one person actions in a game, makes the stock market dive – or go up.

With a turning point in a game, a person can go from potentially living in a trailer house to success where everyone wants to name their kid “Wayne” (Rooney) or make a movie called “Ronaldo”. Even other super stars such as Kobe Bryant (of course he wears Nike shoes) gets in the act of emulating others.

Although this video is a commercial and Nike is big business, it is a cool video. Call the video a full length movie in three minutes. Enjoy.

Cool Nike Video – It’s Like a Micro Movie is a post from: TOPIX To Share

I tell clients all the time when starting a business, find the money first before signing any contracts. As much of a “no-brainer” as the previous statement seems, it happens.

I know people who paid rent for six months before getting the funding for their business. Fortunately, the time was only six months.  Could you imagine being in a contract for three years at $1,500 per month without a business? You would be out $54,000!

Before getting the keys to the property, first do a business plan so see the feasibility of the project. Next, find the money.

When finding the money, where do you look?

As I’ve stated before in my article, “Why Small Businesses Can’t Get Loans“, only about 4% of money for start up business comes from banks. Some of the big banks (such as Bank of America as I am told) have blanket policies not to lend to start up business. Wells Fargo had an advertisement talking about new business owners having friends around in the beginning, but now the people are gone and Wells Fargo is there to help. Is this a way of Wells Fargo saying they don’t lend to start up businesses?

Some banks won’t make a commercial loan for under $200,000 as well.

When a bank doesn’t lend to start up businesses, this practice may be their policy; however, if the project is good enough, the bank can seek the backing of the SBA and still do the loan.

The SBA (partially) guarantees loans to bank. The idea is when a loan falls outside the banks normal lending practices and/or the client cannot get money elsewhere, the SBA comes in to help businesses get the funding. The SBA has been called “the lender of last resort”.  Businesses do not deal directly with the SBA.  However, the ultimate decision still rests upon the bank.

So where does the money come from?

55% – your savings

10% – relatives

7% – partners

6% – charge cards

4% – venture capitalist

3% – friends

3% – Angel investors

3% – mortgage property

5% – other

Now consider grant money.

Grant is money that does not have to be repaid.

Most grants however require matching funds meaning the recipient also has to come up with funds in addition to the grant money they are receiving.

Grants are usually available through public or private community foundations primarily granting monies to not-for-profit agencies and rarely, if ever, grant money to for-profit businesses.  The grant money for small business may come in the form of assisting you with help and education, not direct funds.

WATCH OUT FOR GRANTS – some grant wording changes throughout the conditions to terms such as – grant – to loan – to equity position.  In addition, to satisfy the conditions of a grant, you may have to spend the money received to do so, thus netting you no additional funds to operate.

When getting help from the government, there’s one thing you need to know right up front about getting money from the government…

They don’t have a single dime to directly lend to you for the start-up of a small business.

You may believe this statement to be untrue because of the way the term “government loan” is thrown around, and we hear about government loans all the time.  (Refer back the the SBA.  The bank is the SBA’s client, not the business.)

The bottom line is there is no direct money.  But that’s okay…

If the government had to give money to any American who wanted to start a business, just imagine how much money they would have to collect in taxes to fund such a program.

Besides, a capitalist system works best when the government uses a hands-off approach with regards to the competitive market system.  Having the government choose who gets funded and who doesn’t is socialism not capitalism.

Finally, getting a funding may not be as difficult as it sounds because money is out there.  If you have a good plan, collateral, credit scores, etc., you can find money.  However, be prepared to face rejection and get creative if you decide to follow your dream.

How to get money for your business is a post from: TOPIX To Share