Preparing for a Recession : How to Survive a Recession

Here are a few things that you can do to stay ahead during a recession and maintain the success of your small business.

Improve Customer Service

Make sure that each and every customer gets special treatment and leaves your store or office satisfied that you have delivered much more than what was expected.

Your employees should also understand that tough times require a gentler touch and your customers need to be treated as VIPs now more than ever.

Since all your competitors may be selling the same products that you are, it will be your satisfied customers who will not only bring in repeat business, but also new customers.

Improve Your Knowledge and Skills

Now would be a good time to build on your knowledge and learn new skills regarding the technical and financial aspects of your business. Your customers should be impressed with your product knowledge.

This not only will enhance your reputation as an expert, but will also ensure that they come to you if they run into difficulties.

Control Your Expenses

Now is the time for you to tighten up the controls on all your expenses, especially those that are not crucial to keeping your business going. It certainly is not a good time to indulge in luxury items; that can wait until the situation improves.

You should also split large expenses into smaller ones so that they become more manageable. Even when purchasing inventory, try to get longer credit periods or better rates by comparing prices offered by different suppliers.

Start Accepting Payments by Credit Card

If you are dealing in consumer goods, then you probably already have a credit card machine; but if you are dealing in industrial items and do not have the ability to process credit card date, then now would be a good time to make that change.

Many of your smaller customers might need to pay you by credit card if they are experiencing a cash flow problem. Recent surveys have shown that more people are using credit cards as a way to deal with the financial downturn.

Lower Your Profit Margins

Keeping in mind that it will only be temporary, this is a good time to lower your profit margins. Notify your existing and potential customers that you are making this move.

You’re going to need more sales to make up the difference, and their goodwill is more important than ever. You can always raise your prices once the recession shows signs of easing.

Use the Power of the Internet

Use the Internet to advertise your products. In comparison to traditional media such as newspapers and television, the cost is very reasonable.

Hire experts who can ensure that your firm is always on top in product searches, and make your website attractive and interactive.

Motivate Your Staff

Your staff should be made aware of your business’ situation in the current recessionary market. They will be motivated to work extra hard to achieve the desired results, if they are convinced that their participation can save the business - and their jobs.

You should also put in extra effort and hours, so your staff will know that you are going the extra mile yourself.

Use these ideas and seek others on your own so your small business will survive the downturn. Only businesses with a solid foundation and foresight survive the inevitable bad times that go along with managing a business. You want to be one of them.

Personal Finance: Don't cut 401k contributions to get instant cash

In the long run,how much you will be loss?

In the past couple of years as the economy has slowed, I have seen a variety of creative methods by people trying to cut corners to increase cash flow, from bringing their lunch to work, to clipping coupons. On occasion, I have seen a few clients contemplate cutting back, or completely stopping contributions to, their 401(k) or 403(b). Although this may seem like a good short-term strategy to increase cash flow, it has a few long-term implications that can prove detrimental.

Taxable income increases

First of all, every dollar that you contribute to your retirement account lowers your taxable income by a dollar. If you make $50,000 a year and contribute 6 percent of your salary, which is $3,000 ($50,000 x 6 percent = $3,000), you will lower your taxable income by $3,000. Therefore, if you cut back your contributions by $1,000, then you are also increasing your taxable income by $1,000. This means that your goal to increase cash flow may be short-lived. When tax time rolls around, you may end up owing more in taxes, because of the higher taxable income. This, of course, helps defeat the purpose of trying to improve your cash flow.

Losing company match

Second of all, many companies offer a company match with their retirement plans. For example, many companies match 1 percent on the first 3 percent you contribute and 0.5 percent on the next 3 percent. So if you cut back your contributions to less than 6 percent, you may be missing out on the company match. And not contributing at least enough to get the company match is, well, plain foolish in my opinion. A company match is free money to you. Why would you not take advantage of it? This is free money that will definitely help your cash flow in retirement.

Additionally, by cutting back on your retirement contributions, you are missing out on the power of compounding and the power of time. To continue with the previous example, if you lower your contributions by $1,000 year ($83.33 a month), and assume a conservative 5 percent annual return, over 20 years you will be losing out on more than $13,000 of interest.

Better think about that..

Finding The Best Mutual Fund Investment

The Facts You should Consider In Mutual Funds

Investing your hard-earned money in mutual funds may be relatively less risky than investing in stocks, bonds, short-term money-market instruments, and realty, but even then you should never let your guard down simply because not all mutual funds available in the market offer the same benefits.

This in effect implies that you will have to limit your investments only to those mutual funds that hold great potential for future growth. It is only then will you be able to get the desired returns from your mutual fund investments.However, selecting the best funds is never easy because the market is virtually flooded with mutual fund offerings and also because it is quite difficult to determine the future prospects of a given mutual fund.

Past performance of a fund may provide some hint about its future prospects, but you should avoid becoming overly dependent on this logic because past performance does not necessarily guarantee future returns. To select the best investment opportunities available, you should instead focus on other aspects such as the profitability of the company, portfolio composition, business policies and strategies, and future growth plans.

If possible, you should also try to gather information about the fund managers who might have been hired by the company to manage your funds. Even then you will not be able to guarantee anything, but still you need to do your homework because unlike life insurance that offers guaranteed returns, mutual fund investments are all about probability.

You benefit when you do your homework because then you automatically reduce the probability that your investments will go down the drain.Since all funds have their own relative risks and ownership cost structure, you should try selecting funds that carry the least risks and capital investment costs. For this, you need to read the "Prospectus" that contains information about the investment strategies, cost structure, risk factors, and other issues related to the mutual fund offering.

While reading the Prospectus of a mutual fund offering, you should never forget to consider various types of costs and charges such as sales charge (load) on purchases, purchase fee, deferred sales charge (load), redemption fee, exchange fee, account fee, management fees, and distribution (and/or service) fees ("12b-1" fees).

After reading the Prospectus of different funds, you just need to compare the associated risks and advantages and make your decisions wisely.For selecting the best funds, you can certainly seek inputs from financial experts, but do not follow them blindly simply because nobody understands your financial needs better than you do. So, just do your homework, select what you think is the best and leave the rest for the markets to decide.

You cannot control everything, can you?

Loan Sharks!

Manage Your Money.
Do Not Jump To These Illegal Money Lenders!

Banks and legitimate finance institutes will normally check the loan applicants' credit history and evaluate their past repayment performance before they approve their loan application. This makes loan applicants with bad credit scores hard to obtain a loan from these legitimate finance organizations. Many bad debtors who urgently need money will turn their head to borrow the money from illegal money lender. These illegal money lenders normally lend out their money with extremely high interest rates and often backed by blackmail or threats of violence. Hence, you are risking yourself if you borrow the money from a loan shark.

What Is A Loan Shark?

By definition, a loan shark is a person or body that offers illegal unsecured loans at high interest rate to individuals, often backed by blackmail or threats of violence. A loan shark is an unlicensed money lender who provides credit to those who are unable to obtain credit from a legitimate financial organization.

What Are The Catches?

Loan sharks which are normally unlicensed money lenders will offer loan to those who need cash. However, there is always a major catch - how much has to be paid back. The terms on offer will usually be very poor. There are many cases of people borrowing a small sum of money and paying double or triple that original sum in interest.

Many loan sharks count their loan's interest rates based on the principle amount and the interest rate may goes as high as 12% per month (144% APR). For example, if you borrow $5000 from a loan shark, you need to pay $600 every month just for the interest. You will never payoff your loan amount if you just pay $600 a month because the interest rate is counted based on principal amount, the $600 you pay is the interest.

The power of interest is work well in your savings, it will generate more cash in your saving account. But if the poser of interest is used on a loan, especially on the loan from a loan shark, it will be very scary as it will generate more and more debts and it make you harder and harder to repay your debts. Take for the above example, if your borrow $5000 from a loan shark and you can only pay $500 each month. Your debts will climb up about $18,000 in 2 years and you have paid $12,000 of interest. Your debts will continue to increase in very scary trend if you continue to pay only $500 to the loan shark; your debts will hit $50,000 in another year (the third year) for your $5000 loan and with $18,000 interest paid.

Many loan shark's customers run away and hiding themselves from loan sharks after finding themselves unable to bear the repayment. And loan sharks will take actions to chase back their money, often they will send out blackmail letter, put scary items at their borrower's home, make scary phone calls and have their "staffs" waiting for client at client's home. In this process, violence action may involve and in the worst case may get the borrower or the borrower's family hurts.

In Summary

It is illegal to borrow money from a loan shark and if you get a loan from them, you are putting yourself at risk of violence and making your debt grows like a mushroom in short period of time. You should consider the possibilities for getting the cash, there are loan programs for people with bad credit scores, check it out with a finance consultant close by to get more information on your options.
If not,you neck will be tied for a long period of time!

Money Matters

My thoughts about Fundamental principles in managing your personal finance

Net Worth - Evaluating Your Current Situation

Knowing where you stand today in terms of your finances is the first step in developing any financial plan. Net Worth (your assets minus your liabilities) is a tool that is able to give you a "snapshot" of your current financial situation. It will help you determine your and what resources you can apply to meeting your goals.
Net worth is the main measurement of wealth. The most straightforward ways to increase your net worth are to increase your assets (by investing current assets and accumulating more) or to reduce your debts. The other number to look at in evaluating your current situation is your net income (your gross income minus your expenses).

Cash Flow Management

Many people find they are spending more than they bring in. It's difficult to increase your net worth (and meet your financial goals) if you are constantly falling behind on the income front. Hence, cash flow management is key to achieving personal financial security. Check and calculate your cash flow using our Cashflow Calculator.

For example, are you spending more on entertainment or other nonessential expenses than your income supports? Or are you spending more than you have to for necessities such as housing, an automobile, clothing, or other similar items? The answers will probably point you to one or more possible solutions, such as cutting back on the non-essentials or finding less expensive alternatives. Then, you can put the money you save to work toward meeting your goals.

Most causes of overspending can be addressed through use of a budget. Simply going through the process of putting together an annual budget can help you prioritize expenses and uncover areas where you may be able to free up more money to use for savings and investments.

Many people find that they can develop the discipline needed to put money aside on a regular basis by budgeting for savings and investments the same way they do for other expenses. A good way to make sure your budgeted amounts actually do go into savings and investments is to set up an automatic saving / investing plan with a bank or a mutual fund company.

Trimming Your Budget

Cutting your expenses will take some effort. You may have to delay some purchases and find ways to spend less on the things that you need to buy. By cutting costs, you should be able to afford to contribute more to your savings and investments. Similarly, if large debt payments are making it difficult to save, you need to look at ways you can reduce this burden so you can move ahead toward your financial goal.

Reduce Housing Costs

One good avenue to explore is the possibility of refinancing your mortgage. The rule of thumb is to consider refinancing your home when mortgage rates drop two percentage points or more below your current rate. But people who plan to remain in their home for a while can come out ahead with a rate reduction of as little as one percentage point.

Buy Smart

How and when you shop can make a discernible difference in your spending. Different items generally go on sale at different times during the year.