Your future depends on the revenue that comes in the future. The money you have now is not enough to get you by. You’re dependent on future revenue for your survival. So, should you cut all expenses to the bone and stretch what remains, or invest the little that’s left to generate future revenue?
When things look bleak, investment is the answer.
Estimating value of an income-generating asset or group of assets such as a business requires considering concepts such as the time value of money, risk and required rate of return. Here is a brief summary.
Owners of small and midsize private businesses may bear more undiversified risk than any other group. Starting or buying a business requires cash. Growing a business requires cash, too. Most business owners have limited funds, and obtaining additional equity or debt capital can be difficult or at least costly and time-consuming. The common result is extreme concentration of assets in the business. In doing this, the owner breaches one of the most widely accepted principles of prudent investment — diversification.
Limitations on who may convert traditional retirement accounts to the Roth no longer exist. This is great because you’re better off with your retirement funds in Roth accounts than any other form of retirement account. This is because of the following.
There’s no doubt business profits are down so now might be a good time to buy a shareholder out and increase your ownership percentage. Just hope that shareholder doesn’t have the same idea.
Tanner Eckler, assistant vice president for Bank of Oklahoma, answers some key questions about the SBA’s new loan programs.
Credit cards are a significant source of capital for small businesses. In fact, The National Small Business Association (NSBA) recently surveyed 288 small businesses and found 86 percent use credit cards as either their primary or sole source of funds! Nearly a quarter reported juggling more than four credit cards used for business purposes.
Pretty shocking, given the punishingly high cost. And since respondents reported using their credit cards as sources of funding, we can safely assume they carry balances. Add to this the turmoil in the credit card market today and we have at hand a real challenge for small companies.
The U.S. Small Business Administration is trying to make it easier on small businesses with loan programs that go beyond the norm. The SBA has hiked the guarantee percentage to lenders and waived the annual fees. In addition, the SBA has started an interest-free, 100 percent loan guarantee program that benefits business owners and lenders.
Certain terms are important to know when calculating your net worth. The terms will help you better understand your overall financial picture as you push forward with your business.
The savvy investor – or, more aptly, the investor who survives and earns a fair return over the long term – knows the difference between investing and gambling.
© 2012 DL Perkins LLC. All rights reserved | The Business Owner is a trademark of DL Perkins, LLC. Registered in the U.S. Patent Office. | Call (800) 634-0605
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