Official Bootstrapper Announcement: Resource Guides for A Financially Better You

Tuesday, October 23, 2012 at 2:32am by Site Administrator

 

Hello Bootstrapper Followers!

Check out the newest addition to our site – a section devoted to educational resources that will help you lead a more financially secure life.  We’re proud to present the most recent addition, Money Matters: A Guide to Teaching Finances to Children.  It’s a five part resource that we recommend you start reading from the beginning, but feel free to jump to the section that speaks most to you. 

Part I: An Introduction to Teaching Financial Independence

Part II: Government-Sponsored Investment Programs

Part III: Actionable Ways to Teach Children Finances 

Part IV: Understanding Credit & Credit Cards for Young Adults

Part V: Trusted Financial Resources for Parents, Teachers and Young People

As always, let us know what you think in the comments or what kinds of resource guides you want to see!

Voting for You: Are the Presidential Candidates Looking Out for Your Business?

Wednesday, September 19, 2012 at 9:59pm by Site Administrator

It is inarguable that small businesses represent the American dream. The family-owned business is a direct reflection of the capitalist system that make it possible for anyone to establish trade of a product or service and to make a living doing so. The image of the little guy doing battle against corporate behemoths has become as much a part of our social fabric as Norman Rockwell’s paintings. As the 2012 Presidential election approaches, small businesses’ interests are high on the lists of both the Democrats and Republicans. 

Why are Small Businesses Important?

The U.S. Small Business Administration (SBA) defines a small business as one that is independently owned and operated, organized for profit and not dominant in its field. Depending on the economic sector a business operates in, this qualifies as a business concern for both the Mom & Pops and small corporation of less than 500 employees. While this is a broad range, the SBA estimates that nearly 80% of business concerns in the U.S. employ fewer than 10 people, and nearly 90% employ fewer than 20.

Small businesses are important to politics. During the last two years of record, the phrase "small business" was mentioned over 10,000 times in Congressional sessions, second only to discussions of taxes and more popular than the phrase "debt limit." Small businesses are important to Washington because they drive two-thirds of the nation’s job growth.

As members of this powerful voting bloc, small businesses have much at stake in the upcoming election. Entrepreneurs are under extremely heavy federal regulation; a recent Gallup poll listed governmental compliance as the most difficult problem these business owners face. They are also heavily taxed; the U.S. has a higher business tax than nearly any other country. Smaller firms bear the brunt of this burden because they lack the resources that let large corporations abuse many tax code loopholes.

Also of growing concern to small businesses is the power that large corporations have in Washington. Corporations may legally donate large amounts of money to campaign funds, which gives big business clout on Capitol Hill. While corporations finance the excessive amount of money spent on campaign funding, politicians will continue to drum up the concerns of small business owners because of their voting power.

Small business owners are very politically active. A survey by the National Small Business Association (NSBA) reports that 97% of these business owners vote in national elections and 94% vote in state elections. Economic and fiscal policy drives these voters, who are rarely known to vote along straight party lines. Both the Obama Administration and Republican Candidate Mitt Romney’s campaign have much to prove to this voting bloc, which amounts to a third of the electorate.

 

The Two Sides and What it Means for Small Businesses


Thus far, President Obama’s administration has attempted to assist job growth in small business with 18 tax cuts, some of which were temporary. The SBA has also set a record high for small business loans, of which more than 150,000 were made since 2008. While Obama has also increased the SBA’s funding by $2 billion, business owners are no longer allowed to borrow against personal property to fund their companies – a decidedly unpopular outcome

The incumbent Democrat’s campaign platform includes the Startup America initiative, a capital matching fund for investors. If re-elected Obama promises additional support to the SBA as it attempts to provide $26 billion in loans to the private sector. Additional proposed tax cuts are designed to reward new hiring and investment in these companies. "Small businesses create 2 out of every 3 jobs in this economy, so our recovery depends on them," said Obama on the campaign trail.

Romney’s governmental record in Massachusetts is less than stellar, as startup businesses dropped by 10% during his last year in office. However, his presidential campaign platform contains plenty of juicy incentives for business owners. Proposing enormous tax cuts for households earning over $250,000 per year, Romney claims that small businesses will be largely unaffected. The idea is that a relatively small number of profitable companies under the small business umbrella create the most new jobs, and so, small business as a whole will not feel the pain.

Romney plans to cut SBA funding by nearly 20%. However, he promises to repeal portions of the controversial Dodd-Frank Act that allows banks to tighten the reins on business loans. Another major talking point of his campaign, the promise to end Obamacare, directly affects these business owners. Under the provisions of Obamacare, federally mandated healthcare legislation has the potential to be very costly to business owners. Romney also promises to stop regulatory increases by capping that spending at zero. Business owners struggling under a heavy load of governmental compliance may find this appealing. Lastly, Romney is a believer in state’s rights and if elected, will give individual states the power to develop healthcare solutions.

A Manta survey in August 2012 among small business entrepreneurs revealed a definite swing toward the Romney campaign. Only 26% of survey respondents claimed they would re-elect President Obama, and 61% said they would definitely cast their vote for Romney. President Obama, in spite of the changes he has offered for entrepreneurs, is dropping in popularity among these voters. A prior Manta poll of the same group of voters in May 2012 showed 6% better numbers than in August. The National Federation of Independent Businesses conducts analysis and endorsements of candidates in all elections and offers detailed information for these entrepreneurs.

 

Piggy Bank Getting the Slops

Tuesday, June 26, 2012 at 1:48pm by Sandy Jones

The economy is shaking currency rates around like loose coins in a jar. With all the noise and fears in conjunction with market fluctuations and international relationships, the currency values are all over the charts. But which moneys are forecasted to do well in the future and which ones appear to be headed downhill for good?

 

Brazil and China

Although minor tensions exist between the two, Brazil has partnered with their biggest trading partner (China) in an agreement to conduct a currency swap. The deal gives their central banks the ability to exchange local currencies worth up to 60 billion reais or 190 billion yuan (equivalent to $30 billion and £19 billion). These funds can be used by the banks to boost bilateral trade, or to build up their reserves for a possible time of crisis.

China has transacted similar deals with Austraila (valued up to $31 billion), Honk Kong, and Japan. Beijing desires an altercated version of the deal, pushing for a settlement in yuan instead of US Dollars in an effort to reduce their dependency on the US dollar. This would actually benefit China’s attempt to make the yuan a global currency. However, as the BBC news reports, China’s slowing economy may be seen as a warning sign by some. According to Brazil’s Finance Minister though, China will continue to be their primary source of trading.

 

India

Financial activity in India has changed as well. Recently, the government increased by $5 billion the amount of their bonds that foreign investors can buy. Following the dramatic decline of the rupee’s value against the dollar, India has sought to increase demand for their currency. Given the 21% drop the rupee took against the dollar, the mere 0.2% increase coinciding with the announcement of higher bond availability was disappointing at best.

In the article released by Bloomberg, noted economists were complaining that the measures taken by the government were temporary and short-term. Sonal Varma, (Nomura Holdings Inc. Economist in Mumbai) put it this way: “The underlying issues of more economic reforms and cutting subsidies are still not being addressed. What has the government done to reduce the fiscal deficit and curb the current-account deficit?”

 

Australia

One of the few remaining AAA rated countries, Australia is gaining more attention for its currency value. China is also the biggest trading partner with Australia, yet even though there were worries over the slowed growth of that country, Aussie’s dollar remained steadfast. This drew the spotlight to the land down under and global banks have shown an increase in Australian dollar purchases.

Most recently, Russia’s central bank looked into the possibility of investing in the Aussie currency. They will allocate about $5 billion (equivalent to 1% of their foreign currency reserves) to Australia’s dollar-assets, including government bonds. In addition to the Russian interest, Germany also investigated the Australian monetary assets and has increased their meetings with Australia’s banks in discussing foreign-exchange strategies.

Even though it appears safer than most other currencies, Australia comes in second compared to the Japanese yen and the Swiss franc according to CNBC.com. Although it remains only a small part of the overall global forex reserves, the Aussie is capable of drawing in substantial capital inflows from portfolio and direct investment flow. While their Gross Domestic Product (GDP) remains relatively low, the economic growth appears quite positive compared to other countries.

 

Canada

Unfortunately, Canada is not doing quite as well as Australia or China, as pointed out by Bloomberg. In fact, the Canadian dollar dropped a total of 1.12% this month, the steepest decline since December. The decline is due in part to the decrease in retail sales – down 0.5%. Jim Flaherty, Canadian Finance Minister, made known his intentions of tightening mortgage terms to help avoid household debt crisis along with the other measures.

Buckling or Booming Businesses

Monday, June 25, 2012 at 1:36pm by Sandy Jones

Despite the challenge of an ever-changing economy, a few businesses are managing to keep afloat with strategic investments and innovative new products. However, not all companies are able to sustain growth.



Procter and Gamble

For Procter and Gamble (PG), the Euro activity and Europe crisis has exacerbated their downward slide. Since the markets slowed down and growth became stagnant overseas, PG decided to route their investments via China instead. However, as investors.com reports, they ended up lowering their sales and profit direction because the exchange rates were so unfavorable. The predicted Earnings Per Share (EPS) of 79-85 cents are only expected to reach 75-79 cents. Additionally, Organic sales growth is not projected to be 4%-5% but rather 2%-3%.

Businesswire.com continues the story noting that PG plans to prioritize its investments in the highest profit markets and largest innovations as part of their strategic approach to the coming fiscal year. The company has made it clear that they are committed to winning the fight against the odds. Part of their initiatives includes more focus, balance, and a strategic approach to wise investments. They have expressed concern over volatile variables such as commodity costs, foreign exchange, and government policies.


Walgreens

In contrast to Procter and Gamble, Walgreens announced just recently their largest quarterly dividend in company history; the previous 22.5 cents per share rose to 27.5 cents per share. Walgreens President and CEO Greg Wasson reportedly attributed the success to their commitments to returning cash to shareholders and staying consistent with their goals of paying out a target of 30%-35% of net earnings for long-term dividends.

This was countered by the company’s recent acquirement of nearly 50% of Alliance Boots in a strategic attempt to put a solid foot on the ground in Europe. What impact did this have on consumers you might ask? Due to uncertainty, the Wall Street Journal notes that investors bailed on Walgreen’s shares out of fears that the European gamble won’t follow through and based on the expensive price tag of $6.7 billion. However, Wasson feels confident the move will benefit the company in the long run. If things pan out the way he expects, it won’t be long before they purchase the entire Alliance Boots Company.


Starbucks

Crowned-king of coffee, Starbucks decided to take on a new flavor of business in an innovative endeavor to create a tea-only shop featuring the Tazo brand. Unlike the typical coffee shops, this store allows customers to choose from over 80 varieties of tea and pay for it by the ounce. CNN shares that the location of the store will be in Seattle’s University Village, nearby the company’s headquarters.

Tazo as a brand has been quite successful, especially since Starbucks purchased them back in 1999. Having paid $8.1 million for the tea company, Starbucks has increased the brand’s value to $1.4 billion. Depending on the success of the first shop, Starbucks may continue to build more in the future. However, the company is currently more focused on bolstering the Tazo brand at the moment.

Starbucks is stirring up excitement in Costa Rica too. Daily Finance reports about the recently opened location in San Jose that offers the complete range of beverages to the Latin American coffee consumers. Starbucks has a history with Costa Rica, but although they import beans from the country, this will be the first store located there. In addition to the coffee shop expansions, Starbucks also added a Farmers Support Center in Colombia and plans to open one in China as well in the coming year. Over the next three years, the coffee-king will team up with a joint-venture partner and open 300 new stores in Mexico and Argentina.


Burger King

The New York Stock Exchange welcomes back Burger King (BK) to the public market through a complicated deal the fast food franchise struck in April (rather than a public offering, the chain sold a minority stake to Justice Holdings Ltd.). Burger King modestly offered 16% of their shares to investors and according to Business Week the shares are on the rise. 3G Capital, who controls 71% of BK’s stock, will hang onto that claim for at least the next six months. Burger King also seeks to expand their business overseas, in Russia and China specifically over the next few years.

Speaking of innovations, Burger King just announced a bacon sundae as one of the limited time offers of summer delights on their menu. The NY Daily News gives us the delicious scoop on this frozen salty-sweet treat. Made with soft serve vanilla ice cream, topped with fudge and caramel sauce, bacon crumbles, and accented with a strip of bacon, it’s not surprising the dessert clocks in at 510 calories. Between the 18 grams of fat and the 61 grams of sugar, this treat is sure to give anyone a heart-attack. Thanks to the recent additions of fruit smoothies, wraps, and new salads, at least there are plenty of alternatives for health-conscious consumers.

It seems successful businesses are strategically planting their feet globally to provide added stability and making safe investments to secure their future despite whatever economic changes come their way. Innovation also plays a key role in determining the success and survival of a business.

Providing for the Future of our Children

Thursday, June 21, 2012 at 9:25pm by Sandy Jones

In America, we want it all. We want the career, the family, and the fabulous life. However, in pursuit of our dreams there are going to be areas that suffer while others prosper. Now that most families have both parents working full time, there is a higher demand for children to be in day care. This shift from stay-at-home parents to working parents has pushed a higher need for child care providers to help a child grow during their fundamental learning years. Since there is a demand for workers, there is also a demand for more child care centers. Being able to start your own business providing child care could be just the change you are looking for in your life.

 

Basics of Starting a Business

Nothing in life is certain, and starting a new business could be one of scariest things that you will ever do. However, sometimes the biggest risks yield the highest gain. If you believe that you have what it takes to start a business, you will want to start right away. One of the first things that you should do is research what style day care you would like to own. Some people would like to have their own business; some will prefer to work from the comfort of their own home. Only you can decide which option will work best with your personality. There are several other steps that you will need to go through but it’s important to start with a few basics.

  • Learn Your State Requirements: Every state is different, and there will be different requirements that you are required to meet before you can be a licensed child care provider. Most states will require you to have some sort of degree and experience in the field. Some states will also require that applicants have child care accreditations. The two main child care accreditations that states look at are the Child Development Associate (CDA) and the Child Care Professional (CCP). Once you have received these you can contact your state and find out the next step in obtaining your license.
  • Find Funding: Dreams of starting a business are great, but you are going to need a way to pay for those dreams. Unless you just inherited some money, chances are that you will be starting from scratch. You will still be able to find funding. There are grants and loans available through the government. Your access to this money will depend on what type of center you want to own. There are other avenues as well. A person wishing to receive funding can look into bank loans, obtain venture capital, ask family and friends for help, or seek help from other businesses. When you go to ask for money you will want to make sure that you have a solid business plan in place that will detail every vision that you have for your center.

 

What Parents are Looking For

To understand the best way to operate your child care facility is to understand what parents will be looking for in a center and how to handle different types of children. One of the most important things to keep in mind is that these parents trust you with their children and are expecting that you provide a safe, educational, and fun environment for their child while they are working. One major requirement is that you and your potential staff understand the fundamentals of early childhood education. Classes can be taken at a local university or are provided by your state. Often times you are expected to continue training continuously so that you are current on all techniques. Another important thing that parents look for is safety. Many states will require that all providers are CPR certified and that each center is inspected regularly. You can also consider calming parental fears by having a security system in place that will allow them to see what has happened in their child’s day. One final aspect that parents will be really interested in is your curriculum. Will their child continue to develop in your care? Will they be able to have fun? Will all their fundamental needs be met?

 

Your Next Move

Now that you have decided that you want to proceed and pursue your dream of being a child care owner, it is important to get started. By understanding that it will be hard work to get your center off the ground, you will be mentally prepared for the road ahead. Find people that have been in your shoes before and ask them about what worked for them and what didn’t. This will help you learn what mistakes not to make and how you will want to operate your own facility. Once you have this understanding you will be able to have a particular niche developed. Your personal niche is what you will use to promote your center and help find clients that will work well within your educational environment.

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The Dow Jones Pendulum Swings Again

Monday, June 11, 2012 at 2:49pm by Sandy Jones

If you have been following the stock market lately, you have probably noticed that it can be very hard to keep up. Our economy is ever-changing and the stock market is greatly affected. The Dow Jones is probably one of the most popular industrial averages that people use. The question remains, who actually understands what it means? With a little bit of background information it is easier to understand the changes that have been occurring lately with businesses and the Dow.

 

 

What Has Been Happening?

The Dow was created by Charles Dow and was officially launched in 1896 comprised of 12 companies. The method that was originally used to calculate the prices is a little more complicated these days. Now the Dow will also look at stock splits, and other actions like mergers and acquisitions. The Dow has also expanded its portfolio to include more than 30 companies. Lately, stock markets around the world have been suffering as different countries are struggling financially. Due to the fluctuations and foreign concerns, the fluctuations have been very visible in the stocks.

Recently, reports have shown some light at the end of the tunnel for the European debt crisis and there was talk that officials could soon reach a solution for many of the countries. Ever since May there has been a drop in the stock market because of the growing concerns. The main focus has been on if Spain would need a bailout or not. Additionally, since Greece is still struggling and now possibly withdrawing from the euro currency union, it is hard to have faith in financial markets. Though there are still things to work out, there is hope. Even the Federal Reserve has talked recently about the possibility of buying more bonds in an effort to boost the American economy. These positive affirmations led to the Dow closing at its highest day of 2012 on June 6. Now that the Dow is rising, can these be a sign of more growth to come?

 

Signs of a Turn Around?

Since the dramatic rise, people are wondering if they can expect to see the stock market continue to rise. Economists believe that in order for this new trend to continue, there will still need to be additional work done in the foreign market. It is imperative that Europe learns a lesson or two from China. With news that the Chinese economy could soon see a slowing of growth, the People’s Bank of China lowered its interest rates. This is the first time since 2008 that it has lowered rates. China’s quick thinking and pressure from the U.S. to make sure that it’s not affected by China’s crisis could possibly give Europe the push it needs to help its troubled countries.

 

Can it Continue?

There is no way to know for sure if these current gains can continue. There are real economic problems that are occurring globally that will need to be handled properly in order for this streak to continue. As with most solutions, there is no easy fix. These global problems will have to be handled in small, precise increments to insure that they are handling the problem effectively. If they can be corrected then there might be continual stock gains. Until then, it is safe to say that though things look great now, we can expect more fluctuations in the future.

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Oiling the Gears For Market Recovery

Thursday, June 7, 2012 at 2:48pm by Sandy Jones

If it seems like the numbers at the pump are getting lower every day, your eyes are not playing tricks on you. They really are declining overnight. In fact, gas prices have dropped a penny every day for the last 19 consecutive days. Although drivers are excited about the cheaper fuel, the decline indicates several factors that are not necessarily positive. There are five facets that give us a better picture of exactly what lower prices mean.

 

Gas Prices Dropping Nationwide

First of all, it is important to recognize that the drop in oil prices has occurred nationwide. This is not a region or area-specific instance. USA Today reports that in South Carolina, the cost per gallon is down to below $3. In California, the other side of the nation, prices are as low as $4.31 a gallon. Overall the reported average for regular gasoline fell to $3.61.

Furthermore, experts predict that by Labor Day, these numbers could get even lower — possibly reaching $3.40. In comparison, Bloomberg notes that this is nearly 40 cents lower than what the national average was almost exactly four years ago prior to the elections, when the national average topped $4 a gallon.

 

Sign of Weaker Economy

According to the Fortune column of CNN, the decline in price-per-gallon comes attached to a weaker economy both here in the United States as well as around the globe. The drama in Greece over its economy as well as China’s slowing manufacturing activity reduced the demand for oil around the world. The hope concerning the impact of cheaper fuel is that economic activity is encouraged among consumers who save on filling up the tank. However, this stimulation is hampered somewhat by two major factors.

 

Job Market vs. Housing Market

Unemployment rose to 8.2% according to USA Today as only 69,000 jobs were added in May, marking the fewest in a year. The percentage point spike caused the Dow Jones to lose 100 points just minutes after the released report. This doesn’t even take underemployment rate into consideration. That number includes job-seekers who gave up the hunt from discouragement in addition to those who are working part-time and want to be employed full time; that rate went up three-tenths of a percent from 14.5% to 14.8%.

At least the housing market seems to be starting down the road of recovery. Despite the lack of jobs, the overabundance of homes is slowly being filled as people resume renting and buying. Sellers are getting smarter and investing in repairs and practical improvements to their houses and many owners are refinancing to lower mortgage rates so they can afford to keep their house and prevent foreclosure. If the job market doesn’t recover soon though, the housing market may be headed for another downhill slide.

 

Political Implications

With all the changes in the economy and the reduction of oil cost, you would think that the presidential elections would be at least partially impacted. But surprisingly, Bloomberg disproves this theory by pointing out that the approval ratings for Barack Obama and Mitt Romney have seen little adjustment.

Hovering around 46 and 47%, Obama’s approval rating has hardly budged over the last few months. It did drop a percentage point to 45% following the latest report on the job market though. It would seem that Americans are less wooed by cheaper gas than they are disappointed in the lack of jobs.

 

Economic Activity Generated

When considering the impact of gas prices on consumer spending, the hope is that the lower cost of fuel will boost economic activity. However, despite the decline so far, money is not nearly as readily handed around as we expected.

Fox News recently highlighted the effect cheaper gas had on Memorial Day travels; an estimated 30.7 million Americans hit the road, driving more than 50 miles per person on average for the holiday weekend. That number is up 400,000 from last year and is solely attributed to lower gas prices and good weather. Despite the increase in traveling, drivers still cut back on the distance they traveled. Half of the survey respondents said they would travel less than 400 miles.

Although travel is the primary area of the economy that is impacted by lower fuel costs, retail stores and smaller businesses hope to be positively affected over the summer by consumer savings being redirected their way. In a best case scenario, the activity boost will spur additional trust and investments by consumers to help the recovery get back on track.

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8 Most Catastrophic Business Collapses in American History

Wednesday, June 6, 2012 at 7:24pm by Sandy Jones

Business collapses are typically marked by one of two things — either the business was unable to keep up with advancements in consumerism or technology, or the business broke the law in a big way. When big businesses fail, countless people lose their jobs. There can be a lot of finger-pointing. At the end of the day, quite a few of these major businesses wind up filing for Chapter 11 bankruptcy in hopes that they can eventually revive their dying conglomerate. Unfortunately, when the media takes hold of these businesses, they are often unable to dispel their unfortunate reputations.

  1. Enron Corporation

    Enron was an energy company based in Houston, Texas, originally founded in 1985 in Omaha, Nebraska. In simple terms, Enron’s downfall stemmed from failure to report their losses and debt from small investment partnerships. Arthur Anderson, a global accounting firm, signed financial statements that misrepresented Enron’s gains and losses and shredded documents that would provide evidence of this crime. Enron committed security fraud when it gave botched copies of their 10K report to potential investors and shareholders. They were also charged with insider trading, as Enron executives sold their stock for $1 billion before declaring bankruptcy. Lastly, they were charged with tax fraud. Kenneth Lay, Enron’s founder, died of a heart attack in 2006, not surprising considering his impending prison sentence.

  2. Napster

    Napster was created by Shawn Fanning as a peer-to-peer music sharing software in 1999. With its sleek, user-friendly interface, users could easily share music with one another from their own personal mp3 libraries for free. However, within months of its conception Napster found itself in massive violation of copyright infringement, and the Recording Industry Association of America filed a major lawsuit that would eventually lead to its downfall. Bands such as Metallica and Dr. Dre were angered by the free sharing of their music, some of which hadn’t even been publicly released. Amidst the drawn-out lawsuit, Napster experienced a surge in publicity that attracted millions of new users, but the fame was short-lived. In July 2001, Napster had to shut down its service, and filed for bankruptcy shortly thereafter in 2002.

  3. Atkins Nutritionals Inc.

    Formed in 1989, Atkins Nutritionals was the backbone of Dr. Robert C. Atkin’s ever-popular Atkins Diet, which dictated that dieters swap out carbohydrates for proteins like steak and cheese. The company sold products such as nutritional packets and packaged foods for consumption while on the diet, also making it easier to find low-carb versions of staples such as muffins, pasta, and cereal. Ultimately, followers of the Atkins diet preferred their own solutions or eating at restaurants to the foods sold by Atkins Nutritionals. Likewise, a number of other companies also began offering low-carb, pre-packaged foods, which caused the company to drop dramatically in sales. It was further weakened when Dr. Atkins himself died in April of 2003. Finally, in 2004, many dieters began abandoning the Atkins diet in favor of other diets that allowed the necessary indulgence of carbs. Those who had lost significant weight on the Atkins diet found that they rapidly gained it back the minute they could no longer eliminate carbohydrates from their diet, outing it as a fad diet. In 2005, Atkins Nutritionals filed for bankruptcy.

  4. Lehman Brothers Holdings Inc.

    Lehman Brothers was a financial services firm founded in 1850 by Henry, Emmanuel, and Mayer Lehman. What began as a general merchandising business blossomed into the fourth largest investment bank in the United States. However, in the midst of the economic crisis, Lehman Brothers began to make some faulty decisions when it came to the subprime mortgage market. As money was lent to people and businesses for homes when they did not have enough collateral, the economy worsened. Those that had simply put small down payments on their homes began to default on their loans. Stockholders began to get nervous and sold off their shares. As a result, Lehman Brothers was never able to get their investor’s confidence back. Lehman Brothers filed for bankruptcy in 2008, and was the biggest bankruptcy case in American history at the time.

  5. Borders

    Borders opened its first bookstore in 1971 in Ann Arbor, Michigan. Founded by two brothers, Louis and Tom Borders, it was right alongside Barnes and Noble as a book store mecca which was often multi-storied and carried a diverse collection of books both fiction and non. Borders once had a technological advantage when it created a software for its stores that predicted sales and helped keep inventory. However, Borders took a crucial misstep in the mid-1990s when the market was changing to primarily digital media. While competitors such as Barnes and Noble created the Nook tablet to satisfy digital needs, Borders outsourced its online market to Amazon. Borders also swapped out much of its inventory for CDs and DVDs, while Barnes and Noble pulled back on such items. Many customers were finding that it was easier to simply order books online or read them on their tablets. In February of 2011, Borders filed for bankruptcy, and then announced its pending liquidation in July. Over 10,000 people lost their jobs as a result.

  6. AOL Time Warner

    AOL, or America Online, saw its heyday in the early 90′s when the internet was becoming a staple for the average American. Complete with an extremely recognizable dial-up tone, AOL served as a place where content could be published and accessed, with its own email service. You paid for internet access by the hour and used keyword searches to score information on the web. This internet service provider had, at its prime, 30 million subscribers. Yet, as internet innovation grew with things like broadband, AOL was unable to keep up. In 2001, AOL merged with Time Warner, which turned out to be a giant error. The merger caused AOL’s customer base to shrink to under 19 million users, and Time Warner sought to spin off AOL into a separate publicly traded company. It did so in 2009, after the eight-year merger. AOL has never recovered.

  7. WorldCom

    WorldCom is a telecommunications company that underwent a major scandal in 2000. Founded by Bernard Ebbers, WorldCom inflated its profits by $4 billion via shady accounting methods, such as reporting expenses as company investments. At its peak, the company employed upwards of 80,000 people and was worth $180 billion. In 2002, WorldCom filed for bankruptcy. It claimed $107 billion in assets, topping Enron as the biggest bankruptcy in American history. The company was in debt by $41 billion.

  8. Kodak

    In 1888, Kodak’s founder George Eastman realized that producing a film camera that the average person could use would be an extremely lucrative business model. However, when digital photography began to take the forefront, Kodak failed to embrace the new technology. They projected that they had at least ten years before digital photography would become mainstream, what with the cost of equipment, the discrepancies in quality between the two mediums, and the difficulties in compatibility with printers and other extraneous equipment. Yet, in their ten-year window, they failed to adapt. Even when they did embrace digital imaging, they ran out of money and could no longer catch up to rapidly growing technology. Finally, Kodak declared bankruptcy in 2012.

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Overseas Business Sailing Away

Friday, June 1, 2012 at 8:44pm by Sandy Jones

The battle over limited jobs right now is already intense, but one factor that has remained largely overlooked is that of outsourcing. Not only are Americans competing against each other for the handful of jobs available, but in addition, jobs are being sent overseas to other countries. Although this sounds like an obvious problem with an obvious solution, you might be surprised to find out that studies have proven conclusively that outsourcing can actually benefit everyone in the long run.

 

What is Outsourcing?

When a company in the United States hires employees overseas to do a portion of their work for them as opposed to giving the jobs to Americans, the process is called “outsourcing”. In 2011, a total of 2,273,392 jobs were outsourced to other countries and nearly half of those were to reduce or control costs, according to recent numbers from Sourcing Line Computer Economics. India currently ranks highest as the top-rated outsourcing country.

Although there are many myths about the disadvantages of outsourcing, looking at the actual facts will help give you an idea of exactly what there is to gain from the situation.

 

Why Outsource?

There are many reasons large companies choose to send their work overseas to foreign workforces, but here are the most common ones:

  • More for less: To put it simply, there is an abundance of foreigners overseas willing to work for substantially less money than Americans. Because companies can pay lower wages and cut the cost of benefits, it serves as a huge incentive for them to export their work to other countries. Saving money is the primary reason companies outsource.
  • Increased productivity: When basic data entry or IT support is sent overseas, it frees up internet usage, manpower, and other resources that allows a company to devote more energy and focus to more specific, technical areas. Furthermore, it allows them to get a mass amount of work done in a short amount of time if they hire temporary employees to focus on one specific area at a time.
  • Boosts economic activity: The IHS released a study in 2005 outlining exactly what benefits arise from outsourcing. Contrary to popular opinion, outsourcing does not have an overall negative effect on jobs in America. Rather, it actually adds jobs because of the economic activity it generates. At the time the report was released, worldwide sourcing of IT-related software and services added 257,042 jobs in one year.

    Because of the amount of jobs sourced-out, inflation was maintained at a lower rate while still keeping productivity high. This in turn increased the actual hourly wages for U.S. workers. More importantly, the activity overseas generates products and services that other countries purchase from us, which boosts the economy as a whole significantly.

 

Types of Outsourced Work

At this point, you’re probably wondering what kind of work is actually sent outsourced. In general, most of the work that is outsourced relates to Information Technology (IT) and call center support. However, a recent article by the New York Times highlights the growing trend of using outsourcing for a variety of specialized work.

Drew Smith, a musician trying to make a living, needed a music video for one of his songs but was short on cash. Taking ingenuity to the next level, Smith decided to outsource the project to Bangalore, India to give it traditional Bollywood-style movie magic. The video for his song “Smoke and Mirrors” was not only cheap to make ($2,000) but it was actually quite popular. In 14 days, the video was viewed more than 180,000 times.

Other unique areas of work that have received attention in the world of outsourcing were on a larger scale. IBM Computers, the leading U.S. computer manufacturer, contracted an order for a microchip design from an Indian company that required significant expertise.

The important lesson to take away from these examples is that Americans are learning to experiment and test the abilities of overseas workers. Overall, it becomes clear that the benefits of outsourcing definitely outweigh the costs and being afraid of the myths is an unwise evaluation of the facts.

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Hungry for Business Take-out

Thursday, May 31, 2012 at 5:52pm by Sandy Jones

With the growing industry for technology and the ever-present need for innovation in the business world to increase productivity and adapt to the changes taking place in the economy, it comes as no surprise that business is being taken everywhere. Whether you’re in a car, plane, boat, bus, train, or at a hotel, restaurant, bookstore, coffee shop, or home, business is being conducted all around you on portable devices.

Mobile Phones

Most major phone companies advertise customized options for businesses that purchase multiple lines for their employees.

  • International minutes: Since many companies transact business overseas or internationally, it can be a huge benefit to invest in a plan that provides unlimited international minutes at a price comparable to usage.
  • Discounted rates on multiple lines and devices for businesses: If a company decides to purchase cell phones for all their employees, they may be eligible for discounts on the rate as well as the cost of devices per employee.
  • Shared data and minutes: Some cell phone companies allow businesses to share data and minutes between their employees. This way, neither resource is wasted and the usage overall is more balanced.
  • Consolidated billing: Rather than paying for individual phone lines from various providers, having a group cell phone plan consolidates the billing process and simplifies such matters substantially.
  • Shared access to online data: Most shared business plans allow each employee to access important information online simultaneously, even from different places or at different times. The shared account information makes it easier for people to send and receive information, upload and download documents, and process things all in one place.

In addition to the customized features of business plans, mobile phones have improved in technology to allow for improved video chat and conference calls. Furthermore, smartphones offer a plethora of apps for business use including programs that help with money and time management, stock and business monitoring, as well as a way to deposit checks and other information via picture.

 

Tablets

Although it seems like the natural place for a tablet would be in the home environment far away from work, a survey done by ChangeWave revealed a surprising strategy among corporations relating to tablets. Nearly 78% of the respondents said their companies intended to purchase Apple iPads for their employees.

The six primary uses of a tablet for work purposes include internet access, checking email, working outside the office, sales support, customer presentations, and laptop replacement. As employees have become better accustomed to using the tools available on the tablets, each area of usage has increased over time.

Popular applications and software have swept through the business world like wildfire, particularly for iPads. A few of the most popular apps resemble regular software, such as iWork (similar to Apple’s office suite), Filemaker Go (database), and Power.ME (task and workflow management).

 

Other Devices

  • External Drives: For those who want to transport tons of storage space without lugging around a 50lb PC, a portable external hard drive is just the right piece of equipment to do the job. With a storage capacity up to two terabytes, you would have a hard time running out of room in the suitcase for packing your work.
  • Credit Card Reader: If your business involves a lot of financial transactions (traveling sales persons for example), consider investing in a smartphone credit reader. This nifty device plugs into the earphone jack of your phone and costs about $35 to $50. Financial transactions can be completed on the go so you don’t end up with a stack of checks and a boatload of cash on your person at any given point in time.
  • Portable Scanner: Portable scanners come in a variety of shapes and sizes, but a popular version currently available on the market is a dock for the iPad that saves scanned documents directly to the tablet in high-definition. Although this device (and similar full-page scanners) runs between $150 and $200, a cheaper solution is also available. Hand-held wands are smaller and cheaper, about $50 to $100. However, the image quality is much lower than that of the full-sized document scanners. Still, for basic purposes, wands are very handy for taking business outside the office.
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