Do you know what is the worth of your company? Isn’t it your responsibility to know its worth and work on improving it? In case you didn’t know, it is not too late. A business appraisal is a process which basically dissects your financial situation and lays bare your options and capabilities. It provides an opportunity for any business to know its strengths, weaknesses and how to optimize your assets for maximum profitability. Here are a few reasons why people get their businesses valued.
Common reasons for business valuations
No matter what kind, type, or size of business you are dealing with, the one thing in common between all these is to know how to manage your working capital to ensure a continuous flow of cash at all times. Here are 10 quick and simple tips to help you manage your working capital.
Know how to manage your accounts properly. All cash inflows and outflows must be recorded, tracked, and identified. In addition, all costs must be carefully reviewed in order to find the source behind every entry.
Make short-term and long-term cash projections in order to anticipate and arrange for any future cash requirements.
Be efficient in the process of invoicing. When it comes to invoicing, send out invoices after the arrival and departure of every goods & service, maintain a maximum term duration to clear payments, follow-up on every pending invoice, and cross-check payments with every invoice number to tally the figures.
Do not mix business with pleasure or personal expenses. Hence, always maintain different accounts for business, private, and pleasure to keep away losses and tax calculations. Similarly, loans taken for personal and business needs must also be maintained separately.
Always divide your profits wisely. Although it is natural that you take the first cut from the profits, ensure not to take it all. Always set aside some amount of the profits to meet unforeseen eventualities. Hence, maintaining a safety net from your profits is a good habit.
While setting allowances for travel, food, and accommodation for self and for employees, always ensure to be frugal. Go in only for the necessities and not for extravagance.
Always know how to handle other expenses prudently. For example, set limits for the fees paid to your firm’s lawyer, chartered accountant, auditor, and others. Alternatively, you can opt for other means of payment such as hourly payments or payment per case.
Marketing and public relations dig a deep hole in the firm’s pocket. Hence, be cautious while planning out every marketing event and ensure to adopt a good marketing strategy that focuses on minimum investments but maximum returns.
While thinking of business expansion, plan out a phase by phase expansion rather than going all in at one go.
Always choose from the minimum cost alternatives such as whether to buy or to rent, whether to loan or borrow, or whether to invest or divest. Always prefer options that are cost-effective.
For every business to work in a smooth and effective manner, the overall setup should be efficient and smooth. By this, it means all the people involved in a company’s working have to be satisfied and also contribute to their fullest capacity. The shareholders or investors who are an important part of the company also must be considered as an essential part of the company. They play an important role indeed.
Shareholders expect a share of the company’s profit on a regular basis and that come by an agreement when they buy shares and become a part of the company. Such share in profits are called and dividends and they are a form of real income which is paid to shareholders on the timely basis.
While many legislatures around the globe are giving shock treatments to digital currency lovers by making all transactions with bitcoins as illegal, these troubled coin owners are looking up to one entity for relief. That is the supreme regulator of trade and stock market and the assets; the US Securities and Stock Exchange Commission.
The spreading demonetization move is preventing the miners and traders to carry out an exchange or transaction in the open market and has left millions of coin owners as guards of worthless currency. These coins may get trapped in the wallets as dead money with no way to enter the open market or another market and affect the cash flow in the economy.
Although there have been efforts to get some relief from the money transmission laws of each local or state governing bodies, it can lead to chaos and overlapping of rules, thereby confusing the traders. As a part of consumer right protection and financial policies, the holding and exchange of these currencies are to be carried out only by licensed money transmitters. In order to enter the open market, the traders have to surpass multiple governing bodies and the rules of each body may differ. This leads to time delay and extra expenditure along with the extra effort of meeting documental requirements and essentially discourage the cryptocurrency traders.
The officials of SEC have made remarks stating that for an investor or a trader to trade on digital currencies, he must register as an official trading entity or use any trading platforms registered with the SEC. He can play the roles of a security trader, broker, dealer or trade using the national securities exchange or other alternative trading systems. This will ease out the rules imposed on money transmitters, who in reality have a different method of activity when compared to digital currency transactions.
Many states exempt the aforementioned trading entities registered with the SEC from their local rules for money transmission license.
As a holder of digital assets and to continue as a trader in cryptocurrencies, you can get relaxation from SEC by utilizing the following tips. Continue with the activity using digital assets which are traded under the federal law and if you have other forms of cryptocurrencies, try to convert them with any loopholes.
If both the above options are ruled out, then you can put the effort to become a licensed money transmitter. Check for any categorical exemptions under the federal laws, as governed by SEC and constructively use them.
SEC can simplify the existing stringent rules and provide clarity regarding various regulatory overlaps, particularly of different states. By acting as a central regulatory authority rectifies all these problems automatically.
Financial capital is nothing but the economic resources with a company that is used by the company in meeting its demands as well as the demands of its customers in the form of the various products and services, the major aim of any business is to help the customers in fulfilling their needs thereby making a profit benefitting itself. Nothing happens without an initial investment and it is this financial capital that is invested in the company that speaks about how a company would be able to manage its funds for all its purposes. So when this initial requirement for the profit dreams is made and planned properly, it would definitely help the company in achieving profits to the levels expected by it.
Now below listed is a thread of situations where a business could get tested for such wise decisions regarding the financial capital. These are just simple strategies that would help a business in managing and appointing its financial capital in the right way.
As a quote goes, “Money is an amazing teacher, what you choose to with it, tells whether you are powerful or a powerless person”!! money is obviously the biggest weapon that can make one or break!! So, how we utilize it and what we make out of it is important.
Any business needs a lot of money, or say the basic bare minimum to sustain through and to fill the commitments. We see just the outline of the business, as in investing money, business works and bring either profits or losses and then the story goes on. But, have you ever thought how a well-established corporation or even the new start-up that just launched a year ago is rocking well?
What’s behind all that success? How do they manage and what’s missing in others? that is Financial modeling in the background!!! So, what is this? Read on to know.
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In basic words, it’s a rough process that says about all the operations of the organization in pictorial representation or graphs. This idea forecasts the financial scenario of the organization, with various parameters in the background.
A financial model is inclusive of mathematical calculations that are taken from the history of the organization, showing the current financial scenario, the future projected growth plan financially, and the inventories and the actual depreciation expected over time.
So, the model has various categories and types based on different components variation, but there are a few that many companies swear by. Few are here:
So, now let’s talk about the necessity to have the financial modeling done:
These models as we said are used by small and big companies at large. Any company who is aiming to grow steadily is sure to use such models, that helps them in adhering to the goals and objectives set at the beginning.
In order to be on the safe side with any investment plan, application of good money management techniques is essential, especially when you intend on trading on the Forex. Thus, a full-proof trading plan is very important. However, this is easier said than done because there will come a point in trading where you might have to go all-in to maximize your earnings.
Hence, along with a good trading methodology comes the ability to take timely actions and the capability to take and handle risks. Being a risk-taker will increase your confidence in the future trades and will multiply the profits within a short period, as long as the cards are played right.
In order to minimize risks and maximize profits while trading, two important concepts of money management should be applied. These include:
Investing only a maximum of 10% or less than 10% of your total investment capacity on a single asset
Investing only a maximum of 50% or less than 50% of your total investment capacity at a time
In addition to setting limits on the total amount to be invested per asset per trade, other trading limits can also be predefined in order to control and manage your investments. Some of which are listed below:
Buy Limit – This is the value of the order as mentioned in the trade and it indicates the value at which a particular trade is placed. Buy limit value gives a projection of the future value, that is whether or not the value will increase or decrease.
Buy Stop – This is the value at which trade requests are made in order to buy a specific trade at the quoted price.
Sell Limit – This is a request that is made to sell the trade and the price is usually more than that specified in the trade order.
Sell Stop – Here trade request is placed to dispose the asset at a bid price that is equal to or greater than that mentioned in the trade order.
Buy Stop Limits – This is the limit that is achieved when the future price reaches the values as stated in the trade order.
Sell Stop Limits – This is the limit that used to stop an order placing and is achieved as soon as the bid value matches the order value.
Thus, efficient money management strategies will help you make you better investments and avert or at least minimize trade losses.
You must have heard about cryptocurrencies, especially Bitcoin. There could not be a single person out there who must not have heard about this cryptocurrency that rallied so fast in the last few years.
What is even more interesting to know is how the cryptocurrencies are produced or in other words mined. Cryptocurrencies are not produced like regular money. It is not governed by any central authority who can print it. Cryptocurrencies get produced by a method known as mining.
There is no central bank that regulates cryptocurrencies thus there is another way how every cryptocurrency transaction is gathered and recorded. This is done to form a new block. Those who carry out these tasks are known as dubbed miners. Every time some transactions are on the block when it gets appended a Blockchain. Those who append the block, in turn, get rewards with some amount of the cryptocurrency.
The task is hard to do and this is done so that the devaluation of the currency is prevented which could happen when lots of blocks are built. The miners would have to solve some complicated problems in order to mine cryptocurrencies.
The miners have to compete against each other when they are mining cryptocurrencies. The one who gets the right one forms a block and he gets a cryptocurrency payout.
The difficulty level gets higher and it gets harder as each new block needs to be mined. The rate at which the new blocks get created is steady. Also, there is a finite limit of the number of units that are generated.
Cryptocurrency mining can make some income for you and it can be done as a hobby. The digital currency is very assessable to the public now and a person can earn in hardware costs only. Cryptocurrency mining is definitely not a way to make enough income to be the primary source of income. You also need to invest a lot into hardware to start mining cryptocurrency in huge amounts.
It is late now and not as lucrative as it would have been had you can start mining Bitcoin in 2009.
The Bitcoin mining is not recommended for those who work on small scale. There is a lot of maintenance and investment costs and the process is also very difficult. This does not make it very profitable. It is profitable only when done on a large scale.