November 1, 2011
by Bob Meyer, Editor of BarterNews
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From the desk of Bob Meyer...
Nation�s Households Are Deleveraging
Federal Reserve Bank of New York reports that total U.S.
household debt fell by $1.1 trillion or 8.6%, from mid-2008
through the first half of 2011. The national belt-tightening
comes as the U.S. economy struggles to fend off a double-dip
Manufacturers Are Not The Answer
manufacturers have increased their productivity dramatically
over several decades, according to the National Federation
of Independent Businesses. In fact, it now takes less than a
fifth (1/5) as many workers to produce the same output as it
did in 1950. That�s why the manufacturing sector cannot be
expected to solve the nation�s unemployment problem.
Global Wealth Rising
is getting wealthier, but Americans are not. Total global
wealth grew 14% to $231 trillion from January 2010 through
June 2011, according to the Global Wealth Report. However,
in the U.S. total net worth remains below 2006 levels.
Current/Changed U.S. Listing Information ...
PO Box 538
Conyers, GA 30012
Phone: (678) 342-4141
Fax: (270) 342-4140
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Commercial Barter Industry Faced With Unique Opportunity In Changing
Monetary expert Thomas Greco Jr., author of several books (latest is
�The End of Money and the Future of Civilization�), sees exciting
possibilities ahead for the barter industry. Greco believes the
barter industry has an unusual opportunity to play a large role in
our changing economy/society. Here�s a quick look at his thoughts on
the subject in a recent e-mail regarding the �Occupy Wall Street�
�I've been watching with great interest the OWS movement and am
encouraged to see that so many people are no longer willing to
tolerate the status quo. I've posted a few items about it recently
http://beyondmoney.net. This may be the surge that begins
the kind of real change that people have been looking for.
�Demonstrations and other expressions of discontent can help to
inspire people and encourage them to act, but that energy must be
applied in ways that can effect real change. I'm generally
optimistic about the prospects for a successful metamorphic change
in civilization, but it will require us to learn radical ways of
sharing, cooperation, and organization.
we are to make the necessary shift of power away from Wall Street
and Washington, we will need to reduce our dependence upon their
systems and structures (like political money and banks) and organize
new structures that empower people. Let�s work together to provide
the direction this movement needs.�
Is Your Trade Exchange Missing Out On
Valuable New Business?
your barter company�s listing on BarterNews.com isn�t current, you
are definitely missing out on new business. The web site
BarterNews.com receives heavy traffic � with over 150,000 page-views
every month. Entrepreneurs and corporate executives check the
thousands of articles, the weekly �Tuesday
Report,� and the �Contacts
Section� of our site. They use the latter to find barter
companies with which to do business.
your barter company�s listing up-to-date?
keep your listing current is very easy. See the links below to (A)
update any changes to your company�s listing, such as new location,
phone number, web site or other information, and (B) if your company
has not been listed.
Here�s how to get on board:
make changes to your listing
Now That The Economy Is Picking Up, What�s To Do?
With good news on the economic front (GNP growth of 2.5% last
quarter), plus learning that growth is actually present and
consumers are spending � many are asking, �Now what?� How will I
capitalize on this news, assuming it continues in 2012?
First, be sure your price is right. Because when the issue of
pricing arises, anticipation often follows that the topic will bring
bad news. Avoiding the subject until the last minute makes that
outcome even more likely for firms that are sitting on a pricing
bulls-eye, targeted by their competitors and their customers� supply
While it is a daunting topic, firms that proactively manage pricing
strategy with the right tools in place can produce significant top-
and bottom-line results. Even a point gain in realized prices can
yield a many-fold improvement in profits.
George Brown, and his team at Blue Canyon Partners, have seen four
lessons emerge from their work with national and international
Understand that not every price challenge is real.
We use a graphic of a bulls-eye with arrows missing the target to
illustrate the fact that many of your customers make their purchase
decisions because of superior products, services, or relationships
rather than price. Remembering � and, more importantly, reinforcing
� the non-price advantages that won your firm business in the first
place can allow you to avoid unnecessary participation in the
vicious cycle of price-based competition.
Build a strong analytics foundation to assess the business
Knowing where and when pricing pressures are likely to be intense
can enable you to make the correct decisions on price increases and
determine the right responses to competitive challenges. A �one size
fits all� pricing strategy is likely to be correct on average, but
wrong in every application.
Use best practice approaches to pricing strategy.
We recently heard a case study about a company that successfully
introduced a premium price product into a challenging market by
implementing a strategy that �gave customers an option that they
could refuse.� This, and other best practice initiatives, can yield
some major gains for your company.
Create value to capture value.
While this message applies more to 2013 and beyond than to 2012, it
underlies all successful pricing strategies. If you are delivering
value to your customers, you can be rewarded for it, through a price
premium or otherwise. If you aren�t, any success you can achieve is
likely to be short-lived. Asking the question, �How can I deliver
more value to my customers?� in 2012, and taking action consistent
with the answers, can make the discussion of pricing much more
pleasant in future years.
Blue Canyon Partners will be hosting a free webinar on pricing and
the competitive environment on Thursday, December 8, 2011. For more
Four Forces of Cash Flow & How Not to Stress Out Your Cash Cow
By Greg Crabtree
The problem with cash flow is that it lags behind profit for most
businesses. Unless your customers pay you and you pay your vendors
at exactly the same moment, there will always be a time lag. If you
understand the correct order of priority for cash flow, you will
avoid the disconnect.
If you are profitable, you must understand that there are four
forces that demand satisfaction out of your cash flow � and I can
also assume they are in opposite order to what you would prefer:
You must either set aside money or pay chunks of taxes as you go
along, to avoid the April surprise (or October surprise if you
extend how long you stick your head in the sand).
Lines of credit are crack cocaine for entrepreneurs. Get off the
drug as soon as you can.
Core Capital �
Retain after-tax profits until you reach your core capital target,
which is generally defined as two-months of operating costs in cash
with nothing drawn on the line of credit and your anticipated taxes
Reap your reward and finally take after tax profits to diversify
your wealth outside of the business.
If you did not pay any taxes, you either didn�t make any money or
you cheated: both are bad. The biggest hindrance to paying taxes is
the complexity of the tax code; the second is not planning to set
aside cash for paying the taxes. That is why you should monitor your
profitability each quarter and determine how much to set aside or
pay in, depending on the rules.
Try to pay only what is required at the last possible moment to not
incur a penalty, but that also means you have to know to set taxes
aside as profit is earned. Get your tax advisor to do this for you
each quarter � it will be worth it.
Poor management of debt has killed many good businesses. It is like
a drug in that it allows you to postpone the hard decisions long
before you are forced to make them ... when you run out of credit. I
do not recommend funding losses with line of credit financing. It is
OK to use lines of credit to fund profitable growth, but the moment
you use a line to cover a monthly loss, you have started down a
slope that too often ends badly. Make the hard decisions sooner!
The other key about debt is knowing that you can only repay debt
with after-tax profits, with very few exceptions. This is a big hit
to most entrepreneurs who have a great year and think they can use
100% of all their pre-tax income to pay off debt.
As for term debt, only use this debt when you are purchasing a
necessary asset and the payments truly reflect the cost of using
that asset over its useful life.
Somewhere along the way, it is important to find out the simple
calculation that lets you know what a healthy business is. Your
business may be profitable, but if you are pulling all of your cash
out of the business for the wrong reasons, you will find your
cash-cow is out of milk when a downturn happens. The deepest
downstroke in operating cash flows for most businesses is equal to
two-months of operating expenses.
In turn, I recommend setting the �core capital target� at two-months
of operating expenses in cash, in addition to owing nothing on the
line of credit and setting aside any tax amount currently due. You
may want to set the target higher, but you would never set it lower.
Once you have taken care of the first three cash flow forces, you
get to enjoy the fruit of your labor. You can now use those after
tax profits, that the business does not need, to diversify (not
consume) your wealth. The moment you are looking to the profits of
your business to meet your consumption needs, you have headed down a
dangerous path. This is why it is important to pay yourself a
market-based wage for the �job� you do in your business, and live
off your salary. When your business has profits to distribute, you
should first use it to eliminate personal debt and to build assets
outside of the business.
In summary, once you are profitable, it is taxes, debt, core capital
and then you can have a distribution. It is a great formula for
building lasting wealth from your entrepreneurial efforts, and
keeping your cash flow healthy for years to come.
Greg Crabtree has worked in the financial industry for more than
thirty years and founded Crabtree, Rowe & Berger, a CPA firm
dedicated to helping entrepreneurs build their business. He is the
author of �Simple Numbers, Straight Talk, Big Profits!�
Money-Making Reports Available From BarterNews
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Our street-smart restaurant
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The Growth and Use of Secondary
Capital (New Money) Creates Unprecedented Wealth In Today�s New Age
There are many forms of secondary
capital�which can be defined as any financial instrument that
measures and communicates value in a common language. Would you like
to see and learn more about the many forms of secondary capital?
We have 70 free, informative and
inspiring, articles for you in our �Secondary Capital Section.�
Check it out...
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