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July 2010

Audited by the IRS?

Doing Business in Africa

Lady of Steel...

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July 2010




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For more information or to subscribe to Entrepreneurs Anchor Magazine call us at (904) 265-0765 or visit www.entrepreneursanchor.com



Entrepreneurs Anchor Magazine

July 2010


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entrepreneurs contents

Featured Articles 09 Barrister Turned Baker...

Warren Brown is passionate about cake. A renaissance man whose “sugar hightype” entrepreneurial energy is primed with a mix of exotic ingredients, Brown is a lawyer who bakes cakes. He is founder and owner of CakeLove, one of the most unique and fastest growing bakery businesses in the world.

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Audited by the IRS? Doing Business In Africa Lady of Steel... When Nadine Bryson Gramling was a youngster in Lyons, Georgia, she learned the meaning of hard work – picking cotton and working in the tobacco fields. She learned how to set goals and achieve victory as a star basketball player in her hometown high school. She learned to thank God for her abilities and use them in His service.

Entrepreneurs Anchor Magazine

July 2010




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entrepreneurs Editorial Publisher/Editor in Chief Ethelbert Nwanegbo Co Publisher/ Assistant Editor Dr. Francis Ikeokwu, Sr. Freelance Journalist Susan D. Brandenburg Art Creative Director Felicia Wright Contributing Writers Dr. Jarik Conrad Suzy M. Jackson Bryan Smith Dr. Francis Ikeokwu, Sr. The Livingston Firm Felicia Wright Web Designer Eva Bailey Associate Char Cain Subscriptions (904) 265-0765 www.entrepreneursanchor.com 1884 Dean Road Jacksonville, FL 32216 (904) 265-0765 ©Entrepreneurs Anchor Magazine 2010 All rights reserved. Disclaimer: Entrepreneur’s Anchor Magazine is intended to provide general information about business topics, but does not provide legal business advice. The views and opinions presented on all articles and advertisements are solely those of the authors, and do not represent those of the company. Therefore, Brain Media Group , LLC will not accept any liability in respect to any incorrect, incomplete, or unacceptable statement on the magazine.



Entrepreneurs Anchor Magazine

contents

Articles 06 What’s Your Company’s EQ? 15 Sales & Use Tax

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Is Franchising Right For You...?

22

... Developing Your Personal Financial Plan

36

Invisible Measure...

39

Technically Speaking

43

Pitfalls to Avoid in Business Planning

46

Are You Connected?

47 July 2010

Is Your PC Making You Unhealthy?


Breaking Down the Silos of Market Boundaries Visualizing a company’s future often helps keep the engines of a company’s goal running. The challenges however, presented by the ailing economy, have made it crucial for business owners to gain adequate understanding of the business environment, customer demands, shifts or changes in customer’s buying habits and the identification of new markets for their products. These strategies may be attributed to large or medium size companies that have now bought into the “outsourcing frenzy” in order to cut cost or identify other markets for their products. Small businesses can also enhance their survival rate by breaking down the silos of constrained target markets. The economy has made new product and market strategies more important now than ever for small business survival. Small business owners are faced with contracting market size and dwindling revenue; hence, breaking the marketing boundaries has become a necessity for small business survival. In this issue of the Entrepreneurs Anchor Magazine, we have made an effort to introduce strategies that will help business owners retool their business process. More so, we have unveiled new and emerging markets such as the African market. History and media coverage of the African market have been totally negative, thus undermining the opportunities that abound in this market. Research and recent statistics have shown that venture capitalists and strategic investors from China, India, and the United Kingdom are now doubling their bets on key markets in Africa. We hope to shed light on the growing markets and opportunities in the African market in this issue and subsequent issues of the Entrepreneurs Anchor Magazine. Recognizing that we are in a new dawn on the business landscape, the ailing economy has made it mandatory for small businesses to strategize on ways to combat the challenges and uncertainties faced in the current business environment. The priority now is not just survival, but also making profits to sustain the business. More so, we cannot fail to acknowledge the shift in consumer behavior. Consumers and customers are spending less and shopping smart; to put it differently, they are focusing on critical items. Hence, it is crucial for business owners to tailor their product or service to be one of the critical items that consumers and customers are still demanding today. Conclusively, small businesses must go back to the drawing board, re-evaluate their understanding of why they are in business, their vision and mission, their product, who the customers are and proper identification of the customers needs. Companies in the red ocean are now embarking on the following strategies: • Defining their industry similarities and focusing on being the best within it. • Looking at their industries and product through the lens of new market demand. • Identifying new buyer groups and key influencers.

• Defining the scope of the products and services offered by their similar industries.

• Evaluating the industry’s functional or emotional orientation We hope to continue to bring key metrics and informational needs necessary to help our readers and business owners make effective decisions at this crucial time.

Ethelbert Nwanegbo Publisher/Editor in Chief

Entrepreneurs Anchor Magazine

July 2010




What’s Your

Company’s EQ? Assessing and implementing emotional intelligence in the workplace By Dr. Jarik Conrad

You are the vice president at a successful hotel chain. You have just arrived at the office Monday morning faced with a difficult dilemma. You need to decide what to do about Peter, the director of sales at one of your locations. Peter began his career as an associate in the hotel’s customer relations department 12 years ago, and worked his way up through the ranks. He is a smart, dedicated employee who often works long hours – and it shows in the company’s results. The hotel is enjoying a record year and is top in sales among the chain in the state; but there is one problem. Peter has trouble controlling his emotions. He has frequent outbursts and often times talks down to people. His peers hate working with him and one of his promising direct reports has



Entrepreneurs Anchor Magazine

July 2010

threatened to quit – again. What should you do? If you are like many people in your position, you try to ignore the issue because Peter has had such a positive impact on the bottom line. The problem with that course of action, or inaction, is that the problem rarely goes away, and it generally gets worse. If you do not deal with this right away, you may be unable to attract top talent. You may lose several high potential employees. Customers could decide to do business with someone else. People might hold back their creativity for fear of being humiliated. There could be disputes that result in costly litigation. This is a common challenge in corporate America because individuals are routinely promoted for their technical skills with little regard for their ability to work with and through people. Such individuals describe themselves as logical and objective. They are often proud of their ability to get things done without paying too much attention to people’s feelings. Moreover, many performance evaluation systems reinforce their bad behavior. The systems capture what gets accomplished, but often fall short on evaluating how the job is done.


For many business leaders dealing with this issue, once the behavior becomes too obvious to be ignored, it comes down to an ultimatum … the troubled employee must shape up, or be terminated. Well, it does not have to be this way. There are tactics to that will help prevent these problems in the first place. Emotional intelligence (EI) is the ability to recognize and manage one’s emotions, while simultaneously recognizing and effectively responding to the emotions of others. This concept took the business world by storm in the midto-late ’90s after the release of Daniel Goleman’s book on the subject, but it has been sharply criticized in some circles since its time in the sun. One reason for this backlash is claims by some proponents that EI was the cure-all for the world’s problems. While this is not a true statement, imagine a leader without it – cold, disrespectful, rigid, unforgiving, and unpredictable. Who would want to work for or live with that person? EI has also been criticized because people fell into the “either/or” trap, which questioned whether EI or IQ was the key to success. Too many people have discussed these constructs as though they are mutually exclusive. From a practical perspective, the recipe for success includes significant amounts of both ingredients. In fact, EI better enables people to take advantage of their IQ. Imagine an individual with high levels of both—intelligent, optimistic, flexible, respectful and caring. Who would not want to work for or live with a person like that? Of the greatest aspects of EI is that it can be learned. Your employees who want to improve their EI skills can do so, and you can help. Here are some ways to improve emotional intelligence in your organization: 1. Incorporate EI into your hiring processes. The first step to implement emotional intelligence in your organization is to develop interview questions designed to assess selfawareness, interpersonal skills, stress management, adaptability, optimism and level of happiness. This is important because it is better and cheaper to be proactive on the front end than reactive once an individual with attitude problems

is hired. These questions will also help you to set appropriate behavioral expectations for any aspiring candidate. Some examples include: a. What has been your most stressful work experience? How did you manage your stress? b. Tell me about a time when your ability to emp thize with customer or co-worker enabled you to solve a challenging problem. 2. Assess the emotional intelligence of your leaders, and future leaders. Since everybody is different with a unique set of challenges, an assessment, such as the BarOn Emotional Quotient Inventory (EQi), the MayerSalovey-Caruso Emotional Intelligence Test (MSCEIT), or the Emotional Competence Inventory (ECI) would be ideal to pinpoint specific areas of opportunity for leaders and aspiring leaders. The EQi provides a good sense of how people assess their own EI, the MSCEIT measures ones EI abilities, and the ECI measures how others assess one’s EI. 3. Ensure your performance appraisals consider how the job gets done. Reinforce to employees, especially leaders, the importance of interacting with others effectively. Help them to understand how to maximize their contributions without minimizing the contributions of others. This can be accomplished through ensuring a significant weight is attributed to items like communication, teamwork and flexibility. 4. Make emotional intelligence a cornerstone of your succession planning process. Along with the standard technical and educational requirements, document the “soft” criteria necessary for effective performance in each key position in your organization. You can accomplish this through asking job incumbents what it takes to be effective in their jobs; the skills not included on the job descriptions. You no longer have to ignore behavioral issues in your organization for fear of losing highly skilled employees. Infusing all levels of your organization with emotional intelligence will dramatically increase the likelihood of having a great combination—people who do the right things, while doing things right.

Entrepreneurs Anchor Magazine

July 2010






Entrepreneurs Anchor Magazine

July 2010

Product Propostion

Product Differentiation

Marketing Mix

Positioning

Target Market Segment

Marketing Strategy

Product Offering

Advertising, Promotion, and Marketing

Product Marketing

Product Branding

Product Innovation

Product Bundling

Product Packaging/ Delivery

Inbound & Outbound Marketing

Product Market Strategies

Experience

Leadership Skills

Employee Training & Development

Experience & Pay

Employee Retention

Key Person Risk

Lack of Delegation

Hiring Process

Employee

Product and Service Management

Management

PowerHouse Anchor Management Consulting, Inc

Customer Retention Program

Customer Satisfaction

Customer Profiling

Customer Relationship Management

Operating Management

Growth and Profitability

Managing Payout & Distributions

Cash Flow Management

Managing Cost/ Inventory/ Overheads

Managing Liabilities and Equities

Working Capital Management

Accounting & Financial Policies

Drivers of a firm’s profitability and Growth


barrister turned baker by Susan D. Brandenburg

W

arren Brown is passionate about cake. A renaissance man whose “sugar hightype” entrepreneurial energy is primed with a mix of exotic ingredients, Brown is a lawyer who bakes cakes. He is founder and owner of CakeLove, one of the most unique and fastest growing bakery businesses in the world. Brown first began cooking as a young boy because he was always hungry. From throwing together a quick burrito after high school basketball practice to experimenting with new recipes while attending Brown University, preparing gourmet meals for friends and family became so much a part of Brown’s persona that by the time he applied for law school at George Washington University, he included with the application an essay on his passion for cooking. After graduating from GW Law School in 1998, Brown went to work for the federal government, but he found that his bureaucratic job as a litigator with the Department of Health and Human Services lacked the spice he was searching for in life. In 1999, he made a New Year’s Resolution to expand his culinary hobby by learning how to bake. “Most people resolve to lose weight,” jokes Brown. “I resolved to learn to bake the most deliciously decadent cakes on the

planet.” That sweet resolve was destined to evolve into a lucrative new career. Brown took some baby steps before hitting the entrepreneurial highway full-speed, literally moonlighting as a baker and filling orders from co-workers for his ever-expanding repertoire of delicious cakes made from scratch. He then began staging at-home cake parties and cake open houses at art galleries, where he carefully polled people for their cake preferences. Maxing out his credit cards to purchase his first professional baking equipment, the enterprising young attorney turned cake impresario took a course in small business management, wrote a detailed business plan, took a temporary leave of absence for three months, then left his job permanently in late 2000 to rent a tiny corner of a carry-out kitchen and bake full-time. As to fear of failure or success, Brown’s view is surprising in some ways. “Fear never goes away,” declares the seemingly fearless entrepreneur. “It is part and parcel with running a business. There is never any guarantee of success, but I got lucky. I met a Washington Post reporter in March of 2001 who tasted my cake and loved the fact that I’d left a law career to become a baker. The Washington Post story launched me to the world.”

In March of 2002, with a $125,000 loan from the U.S. Small Business Administration, Brown opened his first CakeLove Bakery on U Street in Washington, D.C. Launching his new business just six months following the 9/11/2001 terrorist attacks, Brown faced virtually the same challenge that small business owners across the United States of America faced. “Business came to a screeching halt, and I had the wits scared out of me,” he recalls. “A big wedding cake carried me for two weeks and I was it back then – a crew of one.” Today, Warren Brown has a crew of more than sixty employees at his seven locations in the Washington, D.C. area – six bakeries and the Love Café. A large portion of his business comes from internet sales, through his website www.cakelove.com, and he is expanding into new areas of business daily, including a new line of CakeLove energy bars. Brown’s eventual goal is to make CakeLove a household name. At the rate he’s moving, that goal is within sight. With dreadlocks flying helterskelter, an imposing height of 6’3”, a wide-eyed, friendly smile, totally approachable personality and passionate, energetic eloquence as a speaker, Brown has achieved celebrity status as a guest on the Oprah Winfrey Show, Today Show, and CNN, as well as his

Entrepreneurs Anchor Magazine

July 2010




own “Sugar Rush” show on the cooking channel. He’s been featured on television ads for American Express and written up in such national publications as Reader’s Digest, People, Southern Living and Forbes. Brown has written two books: Cake Love, a treatise on scratch cake baking and the most popular bakeshop cake items, and United States of Cake, highlighting two cakes from each State. Addressing the current down economy,Brown is realistic, despite his phenomenal success. “We’ve partnered with different social media groups and we’ve become more effective at reducing inventory and improving staff efficiency. It’s necessary because I think it’s pretty clear to everyone by now the U.S. Economy isn’t going to snap back to pre-crisis levels.” Knowing the numbers, Brown notes, is integral to running a business, regardless of the economy. “It’s a challenge, with seven locations, to drive down to the bottom line,” he says, adding that sourcing competent professionals to help with the number crunching is essential. “I have to be able to understand where we are and where we’re going and that is not easy without help.” Regardless of the numbers or the state of the economy, Brown vows that there is one business practice on which he will not compromise,

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Entrepreneurs Anchor Magazine

and that is the quality of his CakeLove ingredients. CakeLove (Cakes from Scratch) is synonymous with the very finest of ingredients and will continue that tradition. “It’s our ingredients that set us apart,” says Brown. “European chocolates, fresh fruits and creamery butter versus oil. Our cakes are not too sweet – rich but light. They are layered, round and decadent. They are baked on-site with love.” Another sign of the times is what Brown calls “the cupcake explosion.” With cupcake shops springing up all over Washington, D.C. and across the country, Brown notes that the cupcake trend is both friendly to the budget and fun. “Cupcakes are a delicious alternative in today’s economy,” he said. “We see a lot of brides celebrating with cupcakes for the bridal shower as well as the reception.” Love, obviously, is one of Brown’s favorite words, and wedding cakes have admittedly carried him a

July 2010

few times. Now, more than ever, the founder of CakeLove has reason to celebrate love and marriage on a personal as well as professional level. “My wife, Pamela, and our four and a half-monthold daughter, Poplar, are wonderful,” says Brown. “Our daughter’s name has meaning for both of us. My wife is of Chinese descent and the Chinese character for her surname is the same as that for the poplar tree. There is also a huge poplar tree behind the house where I grew up. That tree holds a great deal of meaning for me. It’s a strong, tall, shade giving tree that peacefully sways in the wind.” Well before she was born, Poplar Brown’s parents heartily agreed on the name they would give their daughter. “Both of us enjoy thinking about the depth of meaning for Poplar’s name,” said Brown. A lucky little girl whose name correlates with an ancient Chinese symbol for strength, peace and comfort, Poplar’s future is filled with sweet promise.


tips marketing

As entrepreneurs, we most often depend on our skills and knowledge in our areas of specialties to succeed in our business ventures. We tend to think little about marketing our product effectively. In fact, effective marketing strategies can determine the difference between success or failure, despite your years of experience. The followings are some marketing tips or ideas that may benefit your promotional efforts: • Endeavor to know who bought your product and why. • Determine what motivates your customers into buying your product over your competitors’ products. • Find a way to include the concept of reduction in price in your marketing strategy. It is one of the dominant motivators in buying. • Specify the benefits your product can provide, such as, time benefits, durability, originality, cleanness, efficiency, convenience. • When preparing a brochure, make sure your message is clear and specific with unique purpose. • Growing your business demands creating a strategic marketing plan and specifying how your customers will benefit from your product in the long-run. Customer experience is the key. Whatever the customer experiences will determine the type of loyalty, behavior, repeat business and referral that will come from the customer. • Be sure to have your competitors in mind when trying to market and position your product. Position your company in relation to the competition. • Perception is the road to action. As a result, design a means for good customer perception of your products or services. If you would like to be known for unlimited product selection, top customer service, high quality products, lower prices than competitors, make it clear. • Do not wait until your company grows before preparing a strategic marketing plan. A plan should be designed from the beginning to channel how your product and service will meet the long-term needs of your customers. • Strategic marketing plans should be followed by designing specific marketing objectives, how to achieve such objectives, and the appropriate details of actions to follow in both position and negative situations. • Majority of entrepreneurs shy away from using the 800 numbers to market themselves. Statistics show a great number of consumers like to dial the 800 # to respond to an advertisement. Therefore, adding an 800 number to your marketing promotion may increase or speed-up the percentage of responses from customers. • When vying for customers, it is important that you do not forget those customers who make frequent purchases and contribute significantly to your sales revenue. The present marketing outreach notion is to be communicating with them frequently and treat them as family. • Continue to grab-hold of business prospects even with a “no” response. A no response for using your product or services may mean several things, and does not in the least signify that your prospect does not like your product or services. Continuous communication with the prospect may result in a change of mind if decision to act arises.

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Audited by the IRS? By Ethelbert Nwanegbo

IRS Audits are on the rise

At the close of every tax season, the IRS uses a computerized screening process to select returns for examination. The computer follows a random sampling process or income document matching program. However, the number of samples selected for audit has risen over the years. As the government and state officials fight with the budget crunch, the taxpayer should expect to see a geometric increase in the number of audits. Audit letters usually go out eighteen (18) months after the filing date.

Your Return Has Been Selected for an Audit

You cannot stop asking yourself why your tax return was selected for an audit out of the millions of tax returns filed with the IRS. After the IRS processes and accepts your returns, a computer program called the “DISCRIMINANT INVENTORY FUNCTION SYSTEM (DIF)� assigns a numeric score to all the tax re-

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turns processed. A high score in the DIF system increases the chance that the examination of the tax return in question will result in proposed changes to the income tax liability. Your return may also be marked for an audit due to a conflict in the reported information and information received from a third-party, such as 1099, W-2, 1098, and the likes. Results of IRS Audit Now that your tax forms are submitted to the IRS, you may be selected for an audit. There are three different results of an IRS audit: A. The IRS could propose a change to your tax return, which may impose additional tax liability or refund on the taxpayer. You have the right to agree or disagree with the proposed changes. The proposed changes letter will detail other options available to the taxpayer should the taxpayer disagree with the proposed amendment to their tax return. B. The IRS tax examination could also lead to an additional refund mailed to the taxpayer, with a letter detailing unclaimed tax credits or errors in the computation of the tax liability. C. The IRS examination could also lead to no changes in the taxpayer’s tax return; thus, you the tax payer will not receive any letter from the IRS. Offer in Compromise The IRS may in certain conditions allow the taxpayer to pay less than the full amount of tax owed. The taxpayer has to meet the following conditions to qualify: • You are not a debtor in an open bankruptcy proceeding • An application fee of $150.00 • Signed Form 656-A, Income Certification for Offer in Compromise • Your offer must be submitted with one of the following payments: 1. Lump Sum Offer- 20 percent payment or a signed Form 656-A application fee and payment. 2. Periodic Payment Offer- The first installment or a signed form 656-A application fee and payment.

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The IRS will accept your offer if: • There is doubt about the amount the taxpayer owed. • There is a doubt about the taxpayer’s ability to pay the amount you owe based on proof of financial hardship. • An economic hardship will result if the taxpayer had to pay the full amount. Three Things a Tax Payer Must Know When Audited by the IRS: 1. Act Fast or Lose the Right to Fight Upon receipt of the IRS audit letter, it is advisable for the taxpayer to act fast. Be sure to respond to or call the IRS office to initiate actions or ask for more time to respond to the letter. Ensure that you work within the 30 days window allotted for response to the letter. If no action is initiated on the part of the taxpayer within the allotted time frame, the dispute be-

comes the final assessment and moves on to collection department.

2. Get a Tax Professional Seventy-five percent (75%) of the IRS audits are conducted by mail. You may choose to handle this case on your own or engage the services of a tax accountant, or the taxpayer’s tax preparer. Sometimes, the IRS audit may require an in-person meeting with the audited taxpayer. In this regard, it is advisable to engage a tax accountant or CPA to represent you. 3. Think Before You Speak In an IRS audit, ensure not to give more information than is asked. Ensure that you answer questions tactically and carefully. Giving more information than is asked of you could complicate the taxpayer’s tax situation. Hire a professional to do the job.


$ales and

Use Tax

This portion of the Entrepreneurs Anchor magazine is maintained for the purpose of addressing sales and use tax issues affecting various entrepreneurs. Each edition of the Entrepreneurs Anchor magazine will feature sales and use tax issues and tips on different industries from a sales and use tax expert, Dr. Francis Ikeokwu, Sr. Dr. Francis Ikeokwu, Sr., is a partner at PowerHouse Anchor Management Consulting, Inc., and an accomplished professional, educator, leader, financial expert, and management consultant who has vast interest in sharing knowledge and wisdom, especially to the underprivileged. His knowledge and abilities in the business, finance, economics, taxation, and accounting fields have always been a factor in his quest to mentoring entrepreneurs. His academic qualifications include a Doctor of Philosophy (Ph.D.) in Financial Management/International Business and Trade; Masters in Forensic Accounting, (MAC); Master of Business Administration (MBA); and Bachelor of Science (BS) in Finance. His expertise on sales and use taxes, intangible taxes, documentary stamp taxes, and local option taxes came from serving the Florida Department of Revenue for thirteen (13) years as tax auditor and senior tax specialist respectively, and with strong emphasis in interpreting the sales and use tax laws. This edition of Entrepreneurs Anchor Magazine will feature valuable information on sales and use tax for restaurants, bars or lounges, and catering services.

Restaurant

Many entrepreneurs in restaurants and catering services undergo frequent sales and use tax audits, and most are often found to be non-compliance in collecting and remitting the required sales and use taxes. In addition to registering and obtaining an operating license from the Department of Business Regulations, Division of Hotels and Restaurants, entrepreneurs starting a restaurant

business must register for sales and use tax reporting with the Department of Revenue. All restaurant businesses have various taxable sales and use tax transactions. For restaurants in Florida, the tax statutes and rules are found in Section 212.08(1) (c), Florida Statute; and Rule 12A-1.011, Florida Administrative Code. Restaurants range in different sizes, but operate almost in the same manner, selling prepared food for consumption in or outside the prem-

ises of the restaurant. In addition to preparing food, lots of the restaurants operate lounge and night clubs where alcoholic and non-alcoholic beverages are sold or served. Those that offer entertainment and dancing sometimes charge taxable admission fees. Restaurant business owners and those in other food service establishments such as cafeterias, hotels, lunch counters, boarding houses, tourist homes, amusement parks, stadiums, concession stands, or taverns should

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collect and report tax on food or beverages prepared, served, or sold for human consumption on or off the premises of the food establishment.

Charging and Recording Meal Sales

Almost all restaurants record payment of meals consumed in the restaurant or take-out meals on a cash register’s printout, such as cash register tape. It is important to understand that when the restaurant is scheduled for sales and use tax audit, tax auditors from the Department of Revenue will not hesitate to request for the tape registers as source documents for their audit. My recommendation is to ascertain that your sales records categorize and record food sales, beverage sales, and tax collected separately for easy identification. If these items are all combined in one invoice or receipt, make certain that items are taxed properly. You should not allow a situation where the auditors will choose the option to estimate your net sales due to inadequate record or lack of record retention.

Exempt Sales

In as much as many restaurant transactions are taxable, there are still several exempt activities to consider. These include: Bottled water containing no flavoring or carbonation, and separately priced on the sales ticket should be exempt. Meals bought or served by a church. Prepared meals purchased or provided by nonprofit volunteer organizations and delivered as a charitable activity to the residences of handicapped, elderly, or indigent people. Food and beverages sold or served in a student cafeteria in a school offering grades K-12, as part of a school lunch to students, teachers, school employees, or school guests. Food provided or sold by organizations providing special educational, 16

Entrepreneurs Anchor Magazine

cultural, recreational, and social benefits to minors. Meals furnished by an employer to an employee as part of the contract of employment. Paper and plastic coated plates, paper napkins, paper cups, plastic spoons and forks, etc., for use in connection with the operation of a restaurant.

Complimentary Items

Most restaurants may give food away, and/or provide complimentary food to the customer free of charge as promotional, complimentary, or courtesy items. Use tax, as well as discretionary sales surtax is applied on complementary or amount of food given away at the cost price. Sometimes, the restaurant may sell the meal at a discount such as “two for the price of one.” This type of sales must not be categorized as complimentary food items. The business owner should calculate the tax on the sales price charged for both as two for one. The two-for-one sales is considered as discount or reduced charges There is no use tax applied since the “two for one” charge is a discount or reduced charge covering both meals.

Gratuities

Proper recognition and treatment of gratuities are important to ensure compliance to the state tax law. These are considered monetary tips or added services charges to compensate the food attendant. It is important to separate the gratuities from the sales invoice. Gratuities are not taxable, unless it is for the benefit of the employer. Gratuities (tips) or service charges added to a guest check or invoice by the restaurant or by the customer are exempt if listed separately on the invoice and distributed in full to the employees. These gratuities are not part of the sales price, and are not subJuly 2010

ject to tax. On the other hand, if the gratuities are added to a guest check or invoice that benefit the employer, then the charges become taxable.

Bar or Lounge

Entrepreneurs that have bars or lounges or whose restaurants operate bars or lounges may record each sale and add the tax to the selling price. Most bars may also sell prepared food for customer’s consumption in addition to the sales of alcoholic or nonalcoholic beverages. The entrepreneur should be familiar with taxable and nontaxable activities in this type of establishment. Activities in a bar or lounge operation may not be limited to sales and consumption of food, alcoholic or nonalcoholic beverages, but also sales of picnic supplies, ice, t-shirts, and a variety of party items.

Computing Tax Due on Bar/Lounge Sales

No matter what type of activity, different sales tax collection methodologies may be applied. For instance, the bar or lounge may record each sale and add the tax to the selling price. Applying this method will result to the entrepreneur reporting all taxes collected. Another method is to notify the customers that the selling of their purchase includes tax. For this methodology to be valid, the entrepreneur must post signs throughout the areas visible to customers purchasing the drinks. This method requires that the entrepreneur divides the gross receipts by the applicable tax rate (depending on the Florida county located), arriving at the gross sales amount. Therefore, the difference between the gross receipt and gross sales amounts becomes the tax due to be reported to the Department of Revenue.


Example:

Sign posted Gross receipts from bar sales including tax, with sign posted is $27,460. If the bar or lounge is located in Jacksonville, Florida that has a sales and use tax rate of 7% (sales tax 6% plus discretionary sales tax of 1%), the tax due amount should be: Gross Receipts = $27,640 divide by 1.0751= $25,709 (Gross sales) Tax Due = Gross receipts minus gross sales = $27,640 - $25,709 = $1,931 The business owner may decide to set drink prices that do not include tax and with no sign posted to notify customers that the tax is being collected. Most business owner elect to use this method in the pretence to excluding tax from the price of the drink. Selecting this method will require that the business owner calculate and report the tax by multiplying the gross receipts by the tax rate (depending on the Florida county located), to arrive at the tax due amount.

State and county tax rate

Effective tax rate

6.25%

1.0678

6%

1.0659

6.50%

1.0697

7.0%

1.0751

6.75% 7.25% 7.75%

8.0%

1.0724 1.0773 1.0795 1.0817

Example:

Sign not posted Gross receipts from bar sales including tax, with no sign posted is $27,460. If the bar or lounge is located in Jacksonville, Florida that has a sales and use tax rate of 7% (sales tax 6% plus discretionary sales tax of 1%), the tax due amount should be: Gross Receipts = $27,640 multiply by 0.0751 Tax Due = $2,076

stock photo courtesy of morguefile.com

Entrepreneurs located in other Florida counties may use the following rates to compute taxes:

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tips sales & use tax

The sales and use tax is a popular tax category that is overlooked in all aspects of entrepreneur’s operational plan. In fact, forty-five states and the District of Columbia impose sales and use tax on the sales and consumption of tangible personal property (TPP). Most of these states also impose sales tax on certain services. In fact, most states that legislates sales and use tax laws require businesses to register to collect taxes on sales of all taxable activities for the tangible personal properties or services involved. The businesses are also required to pay use tax on the purchase of TPP that it consumes. For instance, in Florida alone, the possible taxable activities include: • Sales of taxable items at retail; • Repair or alterations of tangible personal property; • Rentals, leases, or licenses to use real property (for example, commercial office space, mini-warehouses, or short-term living accommodations); • Rental or lease of personal property (for example, vehicles, machinery, equipment, or other goods); • Charges for admission to any place of amusement, sport, or recreation; • Operating private membership clubs that provide recreational or physical fitness facilities; • Manufacturing or producing goods for sales at retail; • Importing goods from any state or foreign country, for sale at retail or for use in the business; • Selling service warranty contracts; • Ordering and using, on a regular basis, mail-order products on which no sales tax was charged; • Operating vending or amusement machines; • Providing taxable services, such as: 1. Investigation and crime protection services. 2. Interior nonresidential cleaning services. 3. Nonresidential pest control services.

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19


Is

Franchising right for you and your business By The Livingston Firm - Attorneys at Law

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Entrepreneurs Anchor Magazine

July 2010


F

ranchising your business is a great way to ex-

Once you have determined that franchising would be

pand your business without the up-front capi-

appropriate for your business you must decide whether fran-

ing through company-owned units. Furthermore, you get

legally, you must comply with numerous federal and state

tal, manpower, and time required when expand-

increased name recognition, greater buying power, market dominance, and multiple new streams of revenue all while the franchisees are actually funding the expansion of your

business. However, the process of franchising is usually quite long and involves considerable cost. Therefore, before

deciding to franchise, you must consider whether franchising is right for your particular business and whether franchising is right for you.

Is your business unique? Is the concept proven? Are

there teachable systems in place? Will the business provide an adequate return on investment? If so, your business may be apt for franchising.

There are several main reasons franchisees choose to

purchase a franchise rather than starting their own business. First, they are buying the rights to use an established trademark or servicemark. Therefore, prior to investing any

chising is appropriate for you. In order to sell franchises

laws which require the preparation and registration of multiple documents which form the Franchise Disclosure Docu-

ment (“FDD”). The FDD must then be filed with the Federal Trade Commission, as well as with each individual state that

has its own laws for selling franchises within that particular state. Even, states that do not have franchise laws, including the State of Florida, have other laws regarding offering

business opportunities and exemption filings and fees with which one must comply. It can take months to obtain approval in all states and costs can exceed $100,000. There-

fore, your company will have to have the financial resources to undertake the endeavor. Furthermore, your role in the

business will be redefined. Rather than being involved in the operation of your business, your time and energy will

now be spent marketing your franchises and ensuring the success of your franchisees.

If you have done your homework and are prepared to

further time or money, make sure that your trademark, ser-

make important decisions regarding how your business will

Another reason is that they are purchasing a business with a

role to become an effective salesperson and marketer, then

vicemark and other intellectual property rights are secured. proven track record. Therefore, you should have at least a

couple of profitable units beyond the first one already in op-

eration before trying to franchise. Furthermore, you should

operate as a franchise, and you are willing to redefine your franchising may be right for you.

Franchising can provide rapid growth for your business,

research the marketability of your business beyond your

allowing smaller businesses to compete with much larger

yond your current location(s) for what your franchise has

your business into a successful franchise involves multiple

“home state” to make sure that consumer demand exists beto offer. In addition, your business needs to have operating systems and procedures in place that can easily be taught to others in a short period of time, and that are easily uniformly

enforced. Finally, the business must be able to generate an adequate return on the investment.

competitors while reducing overhead. However, turning business and legal decisions that will dictate the success of

your franchise for years. Therefore, finding an attorney that

specializes in franchising, as well as intellectual property and business law is critical. You can learn more about fran-

chising and related intellectual property matters by visiting our website at www.thelivingstonfirm.com.

Entrepreneurs Anchor Magazine

July 2010

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Taking the First Steps for Developing Your

Personal Financial Plan By Suzy M. Jackson

We’ve all heard the saying “people don’t plan to fail, they fail to plan”. If there’s any area that this saying rings true, it is in the area of financial planning. For the busy entrepreneurs, personal financial planning becomes the task they are always “planning” to do when…. tax season is over, the new facility is on-line, the new sales people have been properly trained, etc. As with all good intentions, it just never g e t s

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done. But as we head into the second half of the calendar year, now is the perfect time to stop and make your personal fiscal health and success the main priority. It is doubtful that you went into business so you could work 100+ hours a week, mortgage every asset you own, lose sleep, make sales presentations and clean the bathrooms on Friday—just to have something to do. Like most people, you started a business to fulfill a

Sa vings July 2010


dream of independence and part of that dream includes financial independence. Most business owners don’t have adequate cash reserves and most are under insured, both personally and businesswise. Many have not started a retirement plan. Most distressing is the fact that these owners, partners and majority stakeholders do not have an exit plan from the business or a legacy plan for their families. You need a personal plan to insure that the business that consumes so much of your life actually supports your personal goals and grows your personal net worth. You can begin the process to developing a personal financial plan by following these initial steps: • Dream – What do you really want for the future? • Assess– Where are you now? • Get Help – Seek professional guidance! While there are other processes or steps you need to complete, these three will get you on the right path, by reconnecting you with the real reasons you started your company and developing a very clear picture of your current financial status; so you identify a professional to help develop and adjust the game plan that will work for you.

Step 1 – DREAM Your company started as a dream and it is that dream that drives you forward daily. Turn all that imaginative power toward you for a change

• What do you want your personal financial picture to show? • Do you want a year of living expenses in the bank? • Do you want to fund 100, 75, or 50% of your children’s education? • At what age WILL you retire?

• What do you want to leave to your family and community?

• What toys do you want to buy next year, in 5 years? Your dream has no boundaries; it should include everything you want. Your significant other needs to dream too and these dreams must be shared. What’s different? What’s common ground? What is non-negotiable for each of you? In the dream stage there are no wrong answers, no goal too small or too big. This is your dream, don’t compromise. But you must write it all down. Make it a story or a simple list of bullet points. Having your dream on paper or in an electronic document is necessary for a couple of reasons. This document will help you share your vision with those that

are important to you and those professionals that can help guide you. It also helps you to be certain you haven’t missed anything important. This is your starting point and your success guide. Your dreams for your future are personal, but the achievement of those dreams is a group effort. Your future won’t happen in a vacuum. The dreams and aspirations of those around you also need to be taken into consideration. It should not change your goals or vision, but to find common ground and synergy. Do you have a business partner? Have you talked about their long term goals? For example, does your business partner know when they want to retire? This information is critical to the development of your personal plan. Let us say you and your business partner both want to retire at age 60. If you are both 40 then your personal and business plans need to be accomplished in 20 years. You each need to determine how much income the business must generate to support your savings goal to fund your retirement. How much will each partner need to receive from the sale of the business in twenty years? Now let’s change the example. You are 40 and your business partner is 51 and wants to retire at 60. What’s your plan? Is the partner going to sell her share to you in nine years? Do you have the money or financing to buy her out? Are you planning to sell the business outright in 9 years? Will your share be set aside to grow for another 10 years to fund your retirement or will you pour that money into a new venture which you will run for the remaining 10 years? Understanding your dream is the most important step. It will set your direction and is the motivation you will need to see your plan through to success.

Step 2 – Assess With your dream firmly in mind and written down, it is time to take inventory of what you have. This is actually the hardest step for many people. It’s a bit like going to the doctor for a complete exam. Assessing your current situation can be difficult because it requires fiscal honesty on your part. Putting everything on paper is more than a writing or keyboarding exercise, it is an exercise in self disclosure. As entrepreneurs we are by nature risk takers and one of the risks we often take is moving ahead without full knowledge of what we really have to work with. Business owner’s just find a way to get it done. Don’t lose the fearlessness (or reckless abandon) that helped you survive the stresses of business in our current economy. Use that can- do, will -do attitude to move your personal finances forward. For a true assessment, you need to generate a personal

Entrepreneurs Anchor Magazine

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balance sheet and a personal cash flow statement. For your balance sheet, start by making a list of everything you own. Then value it based on what you would pay someone who was desperate to sell today. Grandma’s antique desk means the world to you, but what will the bargain hunter think it is worth? Next step, list everything you owe. No problem there, the latest statements or bills show exactly what your creditors are expecting to receive. Don’t forget the $5,000 business start up loan from Uncle Frank and the money you have contributed to the business. What you own minus what you owe is your net worth. Your net worth will be your success score moving forward. Increasing net worth is good, decreasing net worth is not. Even if you know your net worth is a negative number, you need to see it in black and white. Getting this information on paper is the best motivation to get moving back into positive territory. Assessment not only includes things that have monetary value, you will also need to assess time. How far are you away from your goals? When do you want the next house? How many years before each child goes to college, need their own transportation or needs to find a job and move out of the garage apartment? Assess your health and the health of those who will affect your life plans. Can you work another 30 years at your current speed and do you really want to? How’s your spouse/partner’s health? How’s your business partner or key employee’s health going to affect your plans? Is there a special needs child that will require support past age 18? And don’t forget about your parents; if you’re retiring at age 60, your parents may be in their 80’s. Assess your business prospects for the future. You may think assessing the future is an impossibility – not so! We don’t know when the next market boom or bust will occur, but we should expect both over a 20 or 30 year cycle. Our home value could go up, down or remain the same. Planning allows us to have a strategy for each possibility. You also have to assess your risk exposures. Don’t attempt to identify a solution at this point, that task comes later. During the assessment phase we want to identify our risk. What could happen to delay or derail our goal? This is another area that requires some personal honesty about your current situation and a clear view of what you really want for the future. Remember our business partner who was 51 years old and wanted to retire in 9 years? What is the risk he/ she won’t be around for the next 9 years of business growth and income generation? If he/she gets sick or injured or dies, what happens to the business? What if the business relation-

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July 2010

ship simply doesn’t work anymore? Sometimes your risk may have a good outcome. If your child gets a full scholarship to a State University, you need a plan for redirecting those funds to another goal. Without a plan for handling the risk of a good outcome, you will run the risk of missing an opportunity to accomplish other goals ahead of schedule. Don’t forget about your personal cash flow statement. The same statement you use for business, you also will need for your personal finances. A cash flow statement (your budget) helps you determine what your life costs you. Many people think that life will get cheaper in retirement. In many circumstances, this is not the case. If you like to play golf now, you’ll want to play more golf in retirement. Those living costs that will go down are usually replaced by higher health care expenditures. The best financial plan for the future is to build on an accurate assessment of your life today. Step 3 – Get Help Even if you are a “do it yourselfer”, now is the time to seek the experts. Armed with your dreams (goals), your assessment documents, you are now ready to get help. Start with your accountant or CPA. They can help you pull together your personal balance sheet and a personal cash flow statement. Some accounting practices have partners within their own firm that specialize in personal financial planning. If that is not a service they offer, they can probably provide you with two or three recommendations of financial planners they or their clients have worked with in the past. Contact your local college and universities that offer financial management degree programs. Their faculties often include active financial planning practitioners. They can also be a great source in locating business and personal financial management courses available to the general public. Talk with your investment and insurance advisors. Some are skilled comprehensive planners within their field. These professionals will often have excellent planning and assessment tools to help you document your goals. Another plus when working with these professionals is that they already have good insight into your circumstances and needs through your current working relationship. So grab a large cup of coffee, a notepad or laptop and the people most important to you and get to work. Remember it starts with a dream and you can make it happen.


Entrepreneurs Anchor Magazine

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July 2010

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27


African Emerging Market Frontiers by Ehelbert Nwanegbo

stand why China has turned to Africa by increasing their investment in Africa from $2 billion in 1999 to $109 billion in 2009; yet other countries neglect the disguised economic hub and run to China. The Chinese understand the investment puzzle, “I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful (Warren Buffet).

It was Michael Bloomberg who said “People are worried about the unknown. They are worried about things that they are unwilling to invest some time in and learn about. I don’t think most of these people are going to be automated out of existence.” It is a tragic reality that the image of most investors in the United States and other European countries of Africa is still mainly that of hunger, total breakdown, lawlessness, high political risk, and corrupt depots. I have heard arguments and read articles from the so called “market analysts” and “investment gurus” who have spent time criticizing and have nothing good to say about Africa. Sometimes, I can’t help but question how one reached a conclusion without the knowledge or ability to discern the nuances of a large and multifaceted continent. As I leaf through the pages of articles, journals and literatures from renowned investors of our time, I could not help but under28

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July 2010

African continent?

African Economic Watch “If there is any part of the globe with the potential for record growth over the next few years, it’s Africa,” South African President Jacob Zuma said recently. Sequel to the economic meltdown that slowly broke down the economic fabric of many strong nations of the world, investors around the globe are seeking a safe haven for their wealth or financial assets. The strong involvement of China and other countries in Asia in Africa leads many investors to believe that the continent of Africa is a gold mine despite the negative press about investing in Africa. The question becomes, if China is the place for tolerable risk and high returns, why is China concentrating all of its investments in the

The pundits are now shifting their base and recognizing the growth in Africa despite the world’s negative economic slope. The positive developments in Africa ushered in by political stability, improvement in infrastructures and country specific economic policies are garnering attention from some countries in Europe, like Germany. It is also note worthy to state that the Sub-Saharan Africa’s growth performance in the last decade has been that of an upward slope. Recent studies and research have shown that there are positive developments in African politics: better governance, lower inflation and a stronger focus on private business. Al-


though we cannot say that the continent of Africa is not totally void of uncertainties and cleaned from its associated risk, there are still a lot of problems; however, the outlook is positive. The increased interest of countries like Brazil, China and India in Africa, is also making German companies consider opportunities there as well. African Economic Resources Are the resources in Africa the reason for its attraction? Could one attribute it to the cheap source of labor and increased transparency in the economic policies of the African continent? A look at the economic statistics and data published by the USTDA shows that growth in Africa is back on track and not just because of oil or mineral wealth. Rather, Asia’s hunger for competitive exports and need to sustain the resource demand has spread to the African continent. Meanwhile, governments are modifying their policies and encouraging private investment in viable and profitable projects with a lasting impact on development. As the Outlook has pointed out, this trend must continue if African leaders are to put their economies on a fast track to growth; and that means more opportunities for investment are bound to open up. A look at centers of business hubs in Africa reveal an impressive flow of capital investments in places like Lagos (Nigeria), Johannesburg (South Africa), and countries like Ghana, Kenya, and Botswana. Why are investors in the emerging equity markets of the world suddenly developing the appetite for risk in Africa? Research has shown that global emerging market funds are deploying nearly 10% of their portfolios in the African continent. Africa is home to 12% of proven oil reserves and 6% of proven gas reserves and other mineral or natural resources. Below is a list of a few countries in Africa and major export for the identified countries: Major Exports from Selected Countries in Africa: • Ghana: Gold, Diamonds, Manganese, Fish, Cocoa, Timber, Aluminum • Nigeria: Oil, Minerals, Cocoa, Rubber • Kenya: Tea, Coffee, Horticulture Products,

Petrolium Products • South Africa: Gold, Diamonds, Metals, Minerals, Machinery and Equipment • Angola: Petroleum, Diamonds, Manganese, Uranium, Gold • Botswana: Diamonds, Copper, Nickel, Livestock • Cameroon: Timber, Oil, Coffee, Cocoa, Cotton, Aluminum • Côte d’Ivoire: Coffee, Cocoa, Banana, Palm Oil, Cotton, Fish, Tropical Wood • Senegal: Fish, Phosphates, Cotton, Peanut, Petroleum Products Profits and Policies “Africa’s profitability is one of the best kept secrets in today’s world economy.”-- Kofi Annan, UN Secretary-General Investors may question the profitability of any investment in Africa; published financial reports from foreign companies operating in the Africa market allude to the fact that Africa is a high profitable market. The profitability of foreign companies in Africa has been consistently higher than in most other regions of the world, reports the UNCTAD study. The upward slope of the profit graph is mainly due to the size of the market and lack of competition in the market. Most firms enjoy the benefits of dominating the market and commanding high price for their products or service. Profits from financial records of foreign firms in the Africa market shows that the rate of return on foreign direct investment (FDI) in Africa has averaged 29 percent. Since 1991, it has been higher than in all other regions, in many years by a factor of two. Between 1983 and 1997, the rate of return for US companies in Africa has been above 10 percent. In recent years, UNCTAD notes, many African countries have significantly improved their policy environment, bringing both greater economic stability and growth and much more liberal conditions for foreign investors. Recently, the International Monetary Fund (IMF) released its Regional Economic Outlook: Sub-Saharan Africa (REO). This report was prepared by a team led by Abebe Aemro Selassie, Robert Burgess, and Montfort Mlachila under the direction of Saul Lizondo. The results of the Regional Economic Outlook are summarized below: Main Findings “The economic slowdown in sub-Saharan Africa looks set to be mercifully brief:

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• Output is projected to expand by 4¾ percent in 2010, compared to 2 percent in 2009. Most countries in the region are now bouncing back from the growth slow down or contraction in output experienced during the global recession. The brevity of the slowdown owes much to the relative strength of the region’s economies heading into 2008– 09, the expansionary macroeconomic stance adopted by most countries and the relatively quick recovery in global economic activity. •  Although most low-income countries experienced only a small decline in growth, the slowdown has imposed some lasting costs on the region. Progress in poverty reduction has been held up.  Some of the region’s oil exporters and middle-income countries have faced large adjustments, including sharply rising unemployment. •  The prospects for 2011 and beyond look good. Output growth is projected to accelerate to 5¾ percent in 2011, playing off the expected continued improvement in global economic conditions. Over the medium term, growth rates in most sub-Saharan African countries are expected to be only marginally below those enjoyed in the mid-2000s. •  The main risks to the outlook are a possible hiatus in the global recovery; causing demand and commodity prices to slip and internal political instability or a deterioration in financial systems in some countries. Perhaps one of the least noticed aspects of the global dow turn has been the resilience of the sub-Saharan Africa region. The limited integration of many countries in the region into the global economy may have helped, but only marginally. Previous (milder) global economic slowdowns had a much more damaging impact. This time, the global downturn was much sharper, but the dislocation was far less. The main factor distinguishing this slowdown from previous cycles has been the stronger macroeconomic position of most countries in the region. As the global financial crisis started to unfold, economic policies were directed quickly and effectively toward ameliorating the impact of the external shocks. Most governments that anticipated the slowdown made plans to accelerate public spending growth, despite stagnant or declining ratios of revenue to GDP. The rise in their fiscal deficits helped to offset faltering private spending. On the monetary policy side, policy interest rates were also reduced except where this would have been counterproductive because of exchange rate considerations or inflationary pressures. Moreover, most countries were able to shield pro-poor and pro-growth public spending. According to preliminary budget outturn numbers, health, and education spending increased in real terms in 20 of the 29 low-income countries 30

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in the region in 2009. In a similar vein, government capital spending also looks to have held up in 2009, increasing in real terms in more than half of the countries in the region. External financing proved to be much less of a constraint than feared. The boom-bust cycle in private financial inflows was less marked than in other regions, largely due to the high share in sub-Saharan Africa of foreign direct investment over other more volatile forms of private capital. Remittances also fell only slightly in response to the crisis. Foreign investors are already beginning to return to the region’s more advanced economies, where macroeconomic policies will need to take into account these renewed flows to avoid overheating, unwarranted exchange rate appreciation, and asset price booms. More than a third of countries in the region, however, remain on the margins of international capital markets and dependent on official forms of external financing. For these countries, the same reforms that are needed to raise productive potential—including promoting trade and financial sector development, encouraging domestic saving and investment, raising standards of governance, and strengthening institutions—are also likely to help attract private inflows on a sustained basis. Looking ahead, for most countries in the region, the emphasis of economic policies now needs to be on medium-term development objectives consistent with macroeconomic stability considerations. With recovery under way, fiscal policies in these countries needs to shift from near-term and output stabilization considerations toward a more traditional focus on strengthening health and education systems and addressing infrastructure gaps. Where fiscal deficits have been increased beyond sustainable medium term paths, these should be revisited so that policy buffers can be restored. Of course, in some countries where output remains well below potential, there remains a strong case for fiscal policy to help sustain demand in the near term, subject to financing availability.” To be continued in the next issue of Entrepreneurs Anchor Magazine. Featured topics in the next issue: • African Strong Domestic Consumption. • Opportunities for the service sector in the emerging African market. • How to do business in Africa • How to source for market information • African Regional Risk Analysis


Doing Business in Africa RESOURCES

www.buyusa.gov/westafrica/en/79.html U.S. exports, imports, GSP imports, and AGOA imports, by Sub-Saharan Africa country and by major commodity sectors http://reportweb.usitc.gov/africa/by_country.jsp Doing Business- Measuring Business Regulation http://www.doingbusiness.org/ PochTimes http://www.theepochtimes.com/n2/content/view/38280/ USAID http://www.usaid.gov/locations/sub-saharan_africa/sectors/eg/index.html BBC http://news.bbc.co.uk/2/hi/africa/7093912.stm International Monetary Fund (IMF) http://www.imf.org/external/pubs/ft/survey/so/2008/car022108b.htm http://www.uneca.org/statistics/ http://www.economicswebinstitute.org/africa.htm www.usda.gov Videos • http://www.youtube.com/watch?v=R3hxUR832Tk • http://www.youtube.com/watch?v=_ko1wLnCQXI&feature=related • http://www.youtube.com/watch?v=YAfSReHN47Q&feature=related • http://www.youtube.com/watch?v=ieNrDaYNoZg&feature=related • http://www.youtube.com/watch?v=H7v5gNzAUG4 Small Business Resources - Web resources for market data include • SBA Research and Data Sources, http://www.sba.gov/advo/research/ • Tourism Data, www.vatc.org • Entrepreneur.com, tips & sources, www.entrepreneur.com/marketing/index.html • Direct Marketing Association, www.the-dma.org • General Data, www.zapdata.com • Trade Show and Conferences, www.tsnn.com • General Marketing Tips & Data, http://www.marketingsherpa.com/ Good general information may be found at • www.entrepreneur.com/marketing/ • SmallBusinessAdministration,www.sba.gov/smallbusinessplanner/ manage/marketandprice/index.html • SCORE at www.score.org • www.Zoho.com Entrepreneurs Anchor Magazine

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Real and Annual Growth Rates (right side side of table) Real GDP GDP($billions) ($billions) and Annual Growth Rates (right of table) 2000 2001 2002 2003 2004 2000 2001 2002 2003 Africa 817.13 844.68 875.06 916.22 961.62 Africa 817.13 844.68 875.06 916.22 North Africa 255.36 265.38 274.26 289.59 303.20 North Africa 255.36 81.16 265.38 84.49274.2690.23289.59 Algeria 79.10 94.93 Algeria 79.10 83.9581.16 86.64 84.4989.33 90.23 Egypt 81.12 93.08 Egypt 81.12 31.6283.95 32.65 86.6435.64 89.33 Libya 30.26 37.24 Africa Libya 30.26 45.0631.62 46.50 32.6549.07 35.64 Morocco 42.39 51.15 Morocco 42.39 23.5845.06 23.98 46.5025.33 49.07 Tunisia 22.49 26.81 Other North Africa/Middle 383.49 East22.49392.8123.58400.14 23.98 424.48 25.33 449.24 Tunisia Sub-Saharan 561.78 626.63424.48 658.41 Other North Africa Africa/Middle 383.49 East 579.30 392.81600.80400.14 of South RepublicAfrica of 187.18 Africa 204.74626.63 212.34 Sub-Saharan 561.78192.30 579.30199.15600.80 Other Sub Sahara 374.60 387.00 401.65 421.89 446.08 Republic of South 187.18 Africa 192.30 199.15 204.74 Angola 20.75 21.40 24.48 25.32 28.13 Other Sub Sahara 374.60 387.00 401.65 421.89 Benin 3.54 3.72 3.94 4.10 4.21 Angola 20.75 21.40 24.48 25.32 Botswana 6.30 6.63 6.96 7.42 7.79 Benin 3.54 3.72 3.94 4.10 Burkina 4.34 4.60 4.80 5.11 5.31 Botswana Burundi 0.616.30 0.63 6.63 0.66 6.96 0.65 7.420.68 Burkina Cameroon 13.604.34 14.32 4.60 14.92 4.8015.59 5.11 16.26 Burundi Cape Verde Is. Cape Verde Islands 0.830.61 0.86 0.63 0.90 0.66 0.94 0.650.99 Cameroon 13.60 1.4614.32 1.44 14.92 1.33 15.591.35 Central African Republic 1.43 Cape Verde Islands Chad 2.940.83 3.23 0.86 3.55 0.90 3.95 0.945.13 Comoros Comoros Islands 0.34 CentralIslands African Republic 1.43 0.35 1.46 0.36 1.44 0.37 1.330.37 Rep. Congo, Republic of 0.40 (Brazzaville) Chad 2.94 0.42 3.23 0.43 3.55 0.45 3.950.46 Cote D'Ivoire 16.42 16.16 Comoros Islands 0.34 16.44 0.35 16.17 0.3615.90 0.37 Djibouti 0.58 0.59 0.61 0.63 Congo, Republic of 0.40 (Brazzaville) 0.42 0.43 0.450.65 Equatorial Guinea2.23 2.26 2.66 3.05 Cote D'Ivoire 16.42 16.44 16.17 15.903.35 Eritrea 0.79 0.87 0.87 0.90 0.92 Djibouti 0.58 0.59 0.61 0.63 Ethiopia 7.23 7.86 8.02 7.71 8.72 Equatorial Guinea2.23 2.26 2.66 3.05 Gabon 7.46 7.64 7.64 7.84 7.95 Eritrea Gambia 0.260.79 0.28 0.87 0.27 0.87 0.29 0.900.31 Ethiopia Ghana 8.307.23 8.65 7.86 9.04 8.02 9.51 7.71 10.06 Gabon Guinea 2.777.46 2.87 7.64 2.99 7.64 3.03 7.843.11 Gambia Guinea Bissau 0.330.26 0.33 0.28 0.30 0.27 0.31 0.290.32 Ghana Kenya 16.468.30 17.18 8.65 17.25 9.0417.73 9.51 18.49 Lesotho 0.852.77 0.87 2.87 0.90 2.99 0.93 3.030.96 Guinea Liberia Guinea Bissau1.000.33 1.03 0.33 1.07 0.30 0.74 0.310.75 Madagascar Madagascar 4.92 Kenya 16.46 5.2117.18 4.55 17.25 4.99 17.735.26 Malawi 2.35 Lesotho 0.85 2.23 0.87 2.29 0.90 2.43 0.932.60 Mali 4.20 Liberia 1.00 4.71 1.03 4.90 1.07 5.27 0.745.38 Mauritania 1.44 Madagascar 4.92 1.49 5.21 1.52 4.55 1.62 4.991.73 Mauritius 4.82 5.14 5.36 5.53 5.76 Malawi 2.35 2.23 2.29 2.43 Mozambique 3.89 4.40 4.75 5.12 5.49 Mozambuque Mali 4.20 4.93 4.71 5.26 4.90 5.44 5.275.76 Namibia 4.81 Mauritania 2.831.44 3.03 1.49 3.12 1.52 3.29 1.623.32 Niger Mauritius 70.564.82 72.74 5.14 73.87 5.3681.77 5.53 Nigeria 86.68 Mozambique 3.793.89 4.05 4.40 4.43 4.75 4.47 5.124.65 Rwanda SaoNamibia Tome and Principe 0.064.81 0.06 4.93 0.06 5.26 0.07 5.440.07 Senegal 6.622.83 6.93 3.03 7.01 3.12 7.46 3.297.92 Niger Seychelles 0.68 Nigeria 70.56 0.6772.74 0.67 73.87 0.63 81.770.61 Sierra Leon Sierra Leone 0.613.79 0.64 4.05 0.68 4.43 0.74 4.470.80 Rwanda Sudan 21.06 26.61 Sao Tome and Principe 0.06 22.34 0.06 23.68 0.0625.10 0.07 Swaziland 2.33 2.38 2.44 2.50 Senegal 6.62 6.93 7.01 7.462.55 Tanzania 7.84 8.33 8.93 9.57 10.17 Seychelles 0.68 0.67 0.67 0.63 Togo 2.10 2.09 2.18 2.24 Sierra Leone 0.61 0.64 0.68 0.742.31 Uganda 6.78 7.20 7.69 8.05 Sudan 21.06 22.34 23.68 25.108.51 Zaire ... (Congo, Democratic 95.46 Republic, 95.92 Kinshasha) 99.74 103.20 108.49 Zambia 7.13 7.48 7.73 8.12 8.50 Zimbabwe 0.58 0.57 0.54 0.48 0.46

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2005

2004 1013.59 961.62 315.80 303.20 99.77 94.93 97.64 93.08 38.56 37.24 51.91 51.15 27.94 473.51 26.81 697.78 449.24 222.68 658.41 475.10 212.34 32.55 446.08 4.41 28.13 8.16 4.21 5.69 7.79 0.72 5.31 16.69 0.68 1.06 16.26 1.39 0.99 5.65 0.39 1.35 0.50 5.13 16.26 0.37 0.67 0.46 3.66 16.16 0.92 0.65 9.47 3.35 8.17 0.92 0.32 8.72 10.64 7.95 3.20 0.31 0.33 10.06 19.42 0.97 3.11 0.81 0.32 5.55 18.49 2.65 0.96 5.67 0.75 1.83 5.26 5.94 2.60 5.92 5.38 5.98 1.73 3.43 5.76 92.66 5.49 4.80 5.76 0.07 8.41 3.32 0.62 86.68 0.86 4.65 28.74 0.07 2.60 7.92 10.86 0.61 2.37 0.80 8.98 26.61 115.87 8.86 0.42

2006 1071.65 331.63 101.61 104.28 40.55 55.74 29.45 503.43 740.02 233.24 506.78 38.60 4.63 8.46 5.91 0.76 17.22 1.17 1.44 5.68 0.39 0.52 16.21 0.70 3.47 0.94 10.57 8.26 0.33 11.32 3.36 0.33 20.58 1.03 0.86 5.82 2.86 5.93 2.04 6.14 6.42 6.23 3.61 97.83 5.05 0.07 8.58 0.65 0.93 31.98 2.65 11.53 2.42 9.47 123.98 9.41 0.40

2007 1136.83 347.96 105.04 111.79 42.87 56.97 31.30 531.23 788.87 245.23 543.64 46.75 4.85 8.98 6.13 0.79 17.79 1.26 1.49 5.69 0.38 0.51 16.47 0.74 3.81 0.95 11.77 8.73 0.35 12.04 3.42 0.34 22.03 1.09 0.94 6.18 3.07 6.08 2.05 6.40 6.87 6.50 3.73 104.14 5.45 0.08 8.99 0.69 0.99 35.23 2.71 12.36 2.46 10.28 131.74 9.96 0.38


Annual Growth Rates 2008 1200.14 368.72 108.83 119.83 45.75 61.58 32.73 562.61 831.42 252.86 578.56 53.76 5.09 9.17 6.40 0.82 18.59 1.33 1.53 5.66 0.38 0.54 16.96 0.79 4.10 0.96 12.77 9.10 0.37 12.78 3.56 0.35 22.40 1.10 1.01 6.57 3.30 6.38 2.12 6.75 7.33 6.69 4.09 110.84 6.00 0.08 9.21 0.72 1.04 37.64 2.77 13.27 2.49 11.22 139.64 10.53 0.32

2009 1206.07 380.17 111.36 124.63 46.94 63.43 33.80 558.48 825.90 246.54 579.36 54.56 5.10 8.44 6.45 0.85 18.82 1.35 1.56 5.44 0.38 0.58 17.44 0.83 3.84 0.98 13.16 8.96 0.37 13.10 3.53 0.34 22.76 1.10 1.03 6.44 3.43 6.47 2.08 6.80 7.62 6.49 4.20 113.05 6.18 0.09 9.29 0.64 1.06 37.86 2.75 13.70 2.44 11.68 135.45 10.33 0.33

2000 3.53 3.13 2.40 5.40 1.15 0.96 4.67 6.20 3.71 4.15 3.48 6.20 5.76 2.76 21.20 -0.90 4.20 6.60 2.30 -0.60 -1.39 103.93 -3.87 0.70 1.47 -13.12 5.95 2.00 5.50 3.70 1.90 7.49 21.34 1.32 24.71 4.76 3.30 3.20 20.98 9.06 4.08 3.49 -1.41 4.20 5.97 3.00 5.86 4.83 3.06 6.50 5.62 5.10 -0.78 6.06 -1.05 3.58 -7.90

2001 3.37 3.93 2.60 3.50 4.51 6.30 4.86 2.43 3.12 2.74 3.31 3.14 5.02 5.16 5.90 3.20 5.30 3.80 1.50 9.90 2.33 4.56 0.10 1.90 1.45 9.23 8.81 2.50 5.80 4.20 3.80 0.20 4.38 3.21 2.90 6.00 -4.97 12.10 3.65 6.70 13.10 2.40 7.10 3.10 6.72 4.00 4.69 -2.21 5.41 6.10 1.79 6.24 -0.18 6.10 0.48 4.89 -2.70

2002 3.60 3.35 4.10 3.20 3.26 3.19 1.68 1.87 3.71 3.56 3.79 14.35 6.00 4.96 4.40 4.50 4.20 4.60 -0.80 9.90 2.32 3.93 -1.63 2.60 17.62 0.66 2.00 0.00 -3.20 4.50 4.20 -7.20 0.40 3.50 3.70 -12.70 2.86 4.15 2.32 4.40 8.16 6.67 3.00 1.55 9.38 4.10 1.14 0.31 6.30 6.00 2.80 7.24 4.14 6.84 3.99 3.30 -4.40

2003 4.70 5.59 6.80 3.10 9.14 5.52 5.63 6.08 4.30 2.81 5.04 3.45 3.90 6.72 6.50 -1.20 4.50 5.00 -7.60 11.30 2.10 3.14 -1.66 3.50 14.70 3.00 -3.86 2.60 6.70 5.20 1.20 0.60 2.77 3.28 -31.30 9.79 6.07 7.44 6.38 3.10 7.80 3.48 5.32 10.69 0.96 4.50 6.45 -6.30 9.20 6.00 2.40 7.10 2.70 4.73 3.47 5.10 -10.40

2004 4.96 4.70 5.20 4.20 4.50 4.24 5.84 5.83 5.07 3.71 5.73 11.10 2.70 4.89 3.90 5.50 4.30 5.50 1.30 29.80 1.91 2.70 1.64 3.00 9.98 1.77 13.11 1.40 8.30 5.80 2.60 4.30 4.34 2.34 2.40 5.25 6.71 2.19 6.86 4.20 7.20 5.95 0.90 6.00 4.00 4.50 6.16 -2.00 7.40 6.00 2.12 6.28 3.00 5.73 5.13 4.65 -4.20

2005 5.40 4.16 5.10 4.90 3.53 1.48 4.20 5.40 5.98 4.87 6.51 15.70 4.80 4.80 7.09 5.00 2.60 6.30 2.80 10.10 2.80 8.50 0.60 3.20 9.20 0.50 8.60 2.70 4.50 5.80 3.00 2.30 5.00 1.20 7.50 5.50 2.00 5.40 5.50 3.00 7.70 3.80 3.50 6.90 3.22 3.80 6.20 1.00 7.53 8.01 1.75 6.80 2.80 5.50 6.80 4.30 -10.33

2006 5.73 5.01 1.85 6.80 5.16 7.39 5.43 6.32 6.05 4.74 6.67 18.60 5.10 3.61 4.00 5.88 3.20 10.80 3.80 0.50 1.30 5.30 -0.30 4.20 -5.20 2.00 11.56 1.20 1.88 6.40 5.05 1.75 6.00 7.00 6.20 4.90 7.90 4.60 11.40 3.50 8.50 4.10 5.20 5.58 5.30 5.00 2.00 5.30 8.60 11.29 2.00 6.20 2.00 5.40 7.00 6.19 -3.44

Entrepreneurs Anchor Magazine

2007 6.08 4.92 3.38 7.20 5.72 2.20 6.27 5.52 6.60 5.14 7.27 21.10 4.60 6.17 3.60 3.70 3.30 7.77 3.60 0.18 -2.91 -1.58 1.60 6.00 10.00 1.30 11.43 5.60 6.30 6.30 1.51 2.70 7.02 4.90 9.50 6.32 7.40 2.48 0.87 4.20 7.00 4.41 3.30 6.45 7.90 6.00 4.75 5.27 6.40 10.16 2.37 7.15 1.90 8.59 6.26 5.80 -6.09

2008 5.57 5.97 3.61 7.20 6.72 8.10 4.56 5.91 5.39 3.11 6.42 15.00 4.97 2.20 4.50 4.40 4.52 5.50 2.50 -0.40 0.50 5.60 3.00 7.00 7.40 1.30 8.50 4.30 5.80 6.20 4.30 3.00 1.70 1.52 7.10 6.30 7.44 4.90 3.00 5.40 6.70 2.80 9.52 6.42 10.10 5.80 2.50 4.50 5.50 6.84 2.00 7.42 0.90 9.10 6.00 5.77 -14.04

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Women in Business

L ADY OF STEEL IS NOW NADINE,

THE TREASURE QUEEN! by Susan D. Brandenburg

When Nadine Bryson Gramling was a youngster in Lyons, Georgia, she learned the meaning of hard work – picking cotton and working in the tobacco fields. She learned how to set goals and achieve victory as a star basketball player in her

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hometown high school. She learned to thank God for her abilities and use them in His service. At age 18, she took a job in Jacksonville, Florida as a receptionist at a brand new company called Southeastern Metals. Getting in on the ground floor with a willingness to work hard and learn all she could about the business, Nadine Gramling had a rare opportunity to rise to the top in the predominantly male-dominated steel industry. “My motivation was to do a good job and help the company grow,” says Gramling, who, by age 39, had earned the nickname, “Lady of Steel.”

“I practically raised Nadine,” said Doc Garland Granger, founder of Southeastern Metals. “She is one hard-working and very smart young lady.” Good mentors are impor-


tant in business, notes Gramling, and she feels privileged to have been mentored by both Doc Granger and his wife, Evelyn, who worked side by side with her as she moved up in the company. Eventually buying the majority of its stock through an employee stock option plan, Gramling continued to grow the company after the Grangers retired, and, in 1996, sold it to Gibralter Steel for many millions of dollars. “I stayed on as a consultant until 2000, handling mergers and acquisitions,” notes Gramling, “dabbled in real estate investments, bought and sold a staffing firm, and devoted more time to serving my church, family, and community. It was a busy life, but I missed being a business owner.” In 2007, Gramling opened an upscale consignment business on Edgewood Avenue in West Jacksonville, naming it Bryson’s on the Avenue. Once again in on the ground floor of a new business, this time with new and gently-used furnishings, accessories and jewelry, the intrepid entrepreneur enjoys having her own company that bears her maiden name. Even more than renewing her identity as the CEO of a thriving business concern, Gramling sees it as a way to help people in today’s challenging economy. Good customer service, excellent treatment of employees, and high quality inventory are all part of Gramling’s well-known business persona, but she feels that Bryson’s is also a way to create opportunity for her employees to build themselves and move up as the company grows. And is it growing! This year, Gramling opened Bryson’s at Beach and Southside Blvds. Her goal is to open several more Bryson’s within the next five years. As to challenges faced and met in her new business venture, Gramling says that she made a mistake when she opened the first Bryson’s too soon. “If I had it to do over again, I would learn the business better before investing so much money in it,” she notes. “I would have a definite business plan and pay more attention to the numbers and the details – particularly those details that my accountant points out.” Laughing ruefully, Gramling admits that, while hiring a good accountant is key to having a successful business, it is just as important to listen to the advice of that accountant and follow it. “I was enjoying the business so much that I wasn’t paying attention to the numbers,” said Gramling. “I needed to be more involved in the daily operation and business side of it, and less emotionally attached to the idea of matching

people and treasures. My accountant said ‘You’re not making a profit. You need to get in or out. I chose to get in.” Another challenge, of course, has been the downward spiral of the economy. “The economy hasn’t helped anybody,” said Gramling. “If they’re not building houses, you can’t put furniture in them, and even though I’ve got inventory, it doesn’t mean that inventory will sell.” Recently, Gramling attended a Consignment Store Owners Convention in West Palm Beach and came home more excited than ever about the advances she has made in the business. “The workshops at the convention confirmed that I am on the right path,” she said. “Technology is here to stay and Bryson’s social networking is working!” In addition to the website, www.brysonsontheavenue.com, which is updated weekly, customers are alerted about the newest items through email and Facebook. For Nadine Gramling, the most exciting aspect of Bryson’s is that there are actually two equally important sets of customers: the consigners, with which she splits commissions 50/50, and the buyers, who get a valuable item at a bargain. “For instance, a customer who was downsizing brought in a beautiful Bernhardt couch and, within a day or two, a young Navy wife came in and bought it for a price that she could afford. She was thrilled. She said she never thought she’d own a Bernhardt couch! She’ll treasure that couch and hand it down to future generations. Things like that happen all the time. Everybody wins!” Her transition from Lady of Steel to Treasure Queen has been an enjoyable one for Nadine Gramling. “I love this business!” she declared recently when a very special customer named Doc Garland Granger entered Bryson’s at Beach. “Whether it’s steel or furniture, Doc taught me a lot about buying and selling quality merchandise,” said Gramling, giving her 95-year old former boss a big hug. “God gave me great mentors and plenty of energy to learn and grow in the world of business. Now, when someone walks in my store and walks out happy, I know I’m where I belong.”

Entrepreneurs Anchor Magazine

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The Invisible Measure Cash-in and Cash-out By Dr. Francis Ikeokwu, Sr.

“Be afraid, and be vigilant!” This recommendation and tip may sound like a movie script but when it involves businesses, cash and cash flows, the concept of “show me your money” becomes a reality and a factor of great importance. In fact, you cannot ignore the adage that “cash is the ruler” in any business setting. Whichever way you may attempt to define the word “ruler,” as a king or as a measuring object, cash should be at the top of the entrepreneurs’ list of delicate assets to watch. Cash is an important part of the current asset that helps businesses to stay afloat. It is the most liquid of all assets (what the business owns). Importantly, all entrepreneurs must keep a close eye on cash management. Cash is a very complex asset that can unexpectedly determine the success or failure of your business objectives. Therefore, cash and cash equivalents remain important tools the entrepreneur needs to monitor and control for the business to succeed. Cash and Cash Equivalent When you think about cash, it is obvious that you immediately refer to the currencies in your wallet or handbag, cash hidden around your house or in the office, safe, or money at the bank. Well, these are all correct. Cash includes: • Coins • Currencies • Savings accounts deposits • Checking accounts deposits • Customer checks • Certified checks • Notes • Money orders, etc. Cash also includes cash equivalents, such as short-term funds and high-liquid investments that are easily and readily converted to physical cash. In fact, cash and cash equivalents are the most liquid of all the entrepreneur’s assets. This means that such assets can evaporate very easily if the entrepreneur fails to monitor the cash flow properly. Cash Flows As a measure of the entrepreneur’s ability to pay shortterm bills when due, cash flows are very important because of their vital role in the operation of your business. Effectively managing your cash flow is the key to attaining success in your business. Entrepreneurs should always be familiar with the movement of cash in his or her company. For instance, how cash is derived; how disbursements are made; how cash is used to fund the operations of the business; authorization of cash disbursement; amount of cash maintained in the company at all times; the strategy put in 36

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place to attract steady cash inflows, as well as control of cash outflows. Cash Inflows Cash inflows relates to the monies coming into the business through various channels established by the entrepreneur. All organizations’ interest is to maximize the cash flows into the company. It does not matter whether the organization is for profit or not-for-profit entity. For profit- oriented organizations that sell tangible products or render services, profit is their utmost goal. On the other hand, the not-forprofit entities have no profit objectives. However, they still require surplus cash to be able to function and achieve success in their business objectives. The mark of any creative entrepreneur is to ascertain that there are constant cash flows into the business. The expectation of money flowing into the company may take several forms, such as receipts from customers; interests received from borrowers; selling equity investments; receiving donations; collecting principal on loans; receiving cash dividends; selling fixed assets; selling bonds; receiving bank overdrafts or bank loans; selling equity securities (stocks), etc. Cash Outflows In as much as the entrepreneur wants to accumulate as much cash as possible, in any normal business setting, he or she cannot avoid spending the cash inflows. Nevertheless, successful entrepreneurs are recognized through their ability to control unnecessary spending. Cash outflows occur when the company spends some or all of the money collected from selling products or rendering services to the consumers. These include, but are not limited to paying for goods and services; paying salaries and wages; paying for office supplies; paying taxes and fines; purchasing debt investments; paying interests to lenders; paying dividends; paying owners’ withdrawal; purchasing fixed assets; repaying cash loans; purchasing Treasury stocks, etc. Most often, entrepreneurs may have guided intentions to minimize cash outflows. We all wish that the words “cash outflows” did not exist. Unfortunately, as long as “wants” and “needs” exist, cash outflows will always remain a necessity to reckon with. The best alternative is to strive to minimize the outflow of cash through effective cash flow control. Controlling Cash Flows In every regular business setting and based on normal expectations, inflows of cash should always be greater than cash outflows. When this happens, entrepreneurs take the ad-


vantage to create growth potentials for the business. Growth potential will only occur if you can attract more cash inflows and decrease cash outflows. Businesses, no matter how large or small, must not measure business success on the number of sales of products or services alone. Your sales figures can evaporate and melt right through your fingers, leaving you wondering what happened to the fantastic sales figures in your sales record. Unbelievably, improper control of cash outflow is the reason most entrepreneurs do not stay around too long to tell their success-stories about fantastic sales figures. Furthermore, most entrepreneurs tend to forget that the so-called “fantastic sales figures” include credit sales that could one day turn into uncollectable. The worst mistake is to tie most of your monies down in those credit sales records, also called “accounts receivable.” Another interesting aspect is not taking into consideration the money you owe to others, especially the short-term debts, also known as “accounts payables.” You must not ignore the seriousness of the amount of money you owe to your suppliers, or to those who rendered services to your business. The amount owed may determine your liquidity and ability to operate effectively. Internal Controls Part of controlling your cash flow is to maintain proper internal control of your cash inflows and cash outflows. Entrepreneurs should always know how to handle and manage funds, which include knowing where the fund is coming from and where they are going. The reason is to ascertain proper receipt of funds; avoiding improper waste, employee fraud, undocumented accounts receivable, accurate payment and record of disbursements, and proper documentation of bank deposits from revenues. Maintaining appropriate control of your operation and sending a message that you are very alert and aware of the daily activities in your organization will be fundamental in discouraging internal or external attempts to defraud your company. You should always retain a reliable professional accountant, mostly through outsourcing the preparation of your accounting information. Outsourcing will provide you with the ample time to focus on what you do best in running your business. Reducing Cash Outflows In fact, the answer to controlling your cash flow lies in the manner at which you approach the control of expenditures, collection of accounts receivables and disbursement of accounts payables. The speed at which you incur expenses must not outpace the rate of cash inflows. You must always look forward to accelerating cash inflows and slowing down cash outflows. During your operational cycle, it is important that you strive for more cash inflows than the cash outflows. In fact, budgeting for both cash inflow and outflow is a good and effective tool to maintaining control of your cash. Slowing down your cash outflow will actually improve your profit margin and overall liquidity. Managing Accounts Receivables Effectively managing your accounts receivable is an important step to improving cash management and maximizing cash flows. You must set up a good billing system for

prompt collection of accounts receivables. Most entrepreneurs base their collection of accounts receivables on trust. Trust is good, but the main objective is to bring cash into the company as quickly as possible. You should promptly bill your customers and aggressively follow up on overdue invoices. Do not be afraid to ask for advance deposits before allowing credit sales. Find a way to make your customers adhere to your accounts receivable policies and credit terms. You must not deviate from your policies, or treat certain customers different from others in terms of your company’s credit policies. Allowing Early Payment Discounts One of the important tools to managing cash inflows is offering a discount for early payment. The offering of a discount for early payment is on the profit you expect to make on your sales or service transactions. There are a few advantages for offering an early payment discount to your customers. For instance, speeding up payment, reducing bad debts, improving cash flows and promoting the sense of care and trust in the minds of your customers. On the other hand, the entrepreneur should also be very alert not to allow the goodwill of early payment discount to back fire and hurt the firm. Understandably, early payment discounts may turn into a costly decision. Obviously, early payment discount can reduce cash at hand, while your sales figure paints a different picture. In addition, your loyal customers may dependably attach too much importance to the discount and may become disappointed when such benefit vanishes. Preventing late payment Entrepreneurs can use various tools to prevent late payments of receivables from customers; reducing the risk of late payments, as well as avoiding non-payment are very important in running a successful business. The entrepreneur should endeavor to develop clear and concise credit terms and payment policies. As an entrepreneur, you should clearly emphasize the statutory rights for payment collection in your agreements. As a valuable document, your billing invoice must carefully contain accurate transactions to attract prompt payment. Items on the invoice must be complete and designed to reflect all transactions and terms. You must clearly understand the significance of your sales invoice as a sales contract; therefore, treat it as such. Another tool for preventing late payment from your debtors is to establish an electronic means of payment. Most successful companies use it as a debt tracking and collection tool. You may send your customers early payment reminders before the due dates. Designing a payment and collection timetable is a good reminder and valuable collection tool for accounts receivables. In order to receive timely payment, you must constantly inform your customers of how much they owe how much he or she is scheduled to pay and at what time the payment is expected. As mentioned earlier, lack of prompt payment from customers can affect the company drastically because of the amount of money tied up in accounts receivables. You must avoid the situation where the majority of your accounts receivable becomes uncollectible accounts. Entrepreneurs Anchor Magazine

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KKOT Associates, LLC www.kkotassociates.com l 866-499-0571 KKOT Associates, LLC is a full service professional services (cost estimating, scheduling, engineering, construction inspection), construction management and general contracting firm with global connections and aspirations. President and founder of KKOT, Kevin K. Osafo-Twum, a Civil Engineer with certifications from New York University for construction cost estimating, ETRAC Solutions for Primavera Products (P3 Project Planner and Contract Management-Expedition) and Construction Quality Management with the U.S. Army Corps of Engineers. Osafo-

Twum has managed projects for agencies including MTA – New York City Transit Authority, Port Authority of New York and New Jersey, Connecticut Department of Transportation, City of New York Department of Design and Construction as well as private firms in Dubai, U.A.E. Kevin K. Osafo-Twum and Vice-Presi-

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dent Scott O. Gordon, both graduates of Manhattan College, established KKOT Associates in New York in March of 2008. KKOT began operating in Florida in September of 2009 and the highly professional team has since gained a local reputation for top quality, cost-effective construction methods and time management. KKOT is certified as a Minority Business Enterprise (MBE), Disadvantage Business Enterprise (DBE), has completed applications for 8(a) Certification, and is working on the firm’s pre-qualification for Duval County Public Schools. KKOT is cur-

rently conducting an interior renovation on the Upper East Side in New York City, church renovation in Jacksonville and has completed various projects with Duval County Public Schools. “After 15 years experience working with some of the largest construction management firms in the world, it is exciting to be working

July 2010

on our own expansion as we help this corecity business incubator expand as well,” said Osafo-Twum. “We see ourselves getting more involved in green renovation and construction of affordable housing in Florida and other states, and building ‘First World Infrastructure’ (roads and bridges) in third world countries. We envision our Jacksonville headquarters as a hub of ever-expanding national and global KKOT connections.” KKOT’s current headquarters at Beaver Street Enterprise Center is a stepping stone to an ambitious master plan that is already well underway. “We’ve contacted the Minister of Transportation and Energy in Ghana, West Africa regarding building roads and bridges there,” said Osafo-Twum, “and I spent a year working in Dubai, which is now a ‘skyscraper graveyard,’ and in desperate need of a the professional services, construction management and general contracting services that a global firm like KKOT can offer.” As to KKOT’s local affiliations, OsafoTwum credits his mentor, Patrick Gordon, President of Quantum Mechanical, for leading him to the Venture Out program at Beaver Street. Gordon, a full-time tenant at the incubator, has nearly tripled his profits since headquartering there just over two years ago. KKOT aims at similar growth in a like time-frame. Ryan Taylor from PPI Construction Management has taken KKOT under his wing and has provided valuable insight into the construction industry and subcontractor opportunities. “We’re builders by profession,” said Osafo-Twum. “By Venturing Out at Beaver Street, we’re building bridges toward a successful future here in Jacksonville and around the globe.”


Techwise

Technically Speaking By Bryan Smith

T

he Amazon Kindle EBook reader is less than 1/3 of an inch thick, has a text to speech text reader and can store up to 3500 (Kindle DX) or 1500 (Kindle) books on one device. Amazon’s Kindle also touts an ATT 3G wireless receiver that downloads books in less than 60 seconds without having to rely on Wifi access to the net. Of course these gems read PDF’s, docx and a wide range of text and eBook formats. Battery life tends to last up to a week on one charge while many books are available for as low as $9.99. The Amazon Kindle costs $189 for its 6 inch screen and the Amazon Kindle DX is $489 for its 9 inch screen. Barnes and Noble recently launched its Nook EBook reader much to the chagrin of the Kindle crowd...it’s gaining a lot of ground. The Nook features a 6 inch display and only ½ inch of thickness! It can store up to 1500 books, has an expandable microSD slot and a built in MP3 player and headphone jack. The Nook also has an ATT 3G Wireless receiver for downloading books, playing games and surfing the web, but Barnes and Noble also sells a Wifi only version of its Nook. I’d say the Nook is a better buy for your bucks and it has more functionality than the Kindle could dream of. The Wifi only Nook costs $149 and the 3G+Wifi package is $199. I have a saying, “Go where the Wifi is!”

Handheld device fans are having a hard time navigating the landscape of phones/PDA’s with the current devices on the market. Two top competitors are the Google Nexus One and the HTC Incredible. I’ll spoil the ending for all you cliff hangers in the crowd. Both devices have identical internals such as processor speed, Bluetooth and Wifi, but why choose one and not the other? The HTC Droid Incredible has an 8 megapixel camera that obliterates the Nexus One’s likable but inferior 5 megapixel camera. The most lovable quality of the Droid is the user experience from HTC’s since user interface design. One word sums it all up...Intuitive. Users fall in love with the way it works with you and its custom-ability or dare I say the way it evolves to the user. The only reason to bypass the HTC Droid Incredible for the Nexus One is the support for multiple carriers such as T-Mobile and Verizon. Skip over the dull and drab look of the Nexus One and jump allow yourself an Incredible experience with HTC’s Droid Incredible. By the way HTC Droid Incredible requires Verizon’s wireless network; can you hear me now?

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Successful Entrepreneur Test Do You Have What it takes to be a Successful Entrepreneur?

• Did you franchise your lemonade stand when you were eight years old (in other words, have you tried other ventures, perhaps even at an early age)?_____ • Do you have “entrepreneurial genes” (did you grow up around a business such as a farm or store that was operated by parents, family, or close mentors)?_____ • Are your spouse, children, and family network loyal and supportive?_____ • Is wealth a better reason to start a business than riches (is it about something more than just money)?_____ • Do you LOVE your business idea and the day-to-day work you’d be doing?_____ • Ever doubled down in Vegas (are you a risk-taker?)_____ • Do you know when to replace passion with pragmatism?_____ • Are you honest, trustworthy, and committed to avoiding evil?_____ • Do you know a spreadsheet from a bed sheet (do you have an understanding of finances and technology?)_____ • Do you have the tenacity of a pit bull (once you start something, do you tend to keep at it until you reach your goal)?_____ Count your number of “yes” answers. (1 – 3) You may not want to jump into anything without a careful consideration of whether this is for you. ( 4 – 7) You may want to proceed further with the planning process. (8 – 10) Watch out, Donald Trump! Source: www.usatoday.com/smallbusiness 40

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NORTH FLORIDA OB/GYN ASSOC.ST.V.5 Felix N. Acholonu, M.D. • Elyse D. Beaubrun, ARNP

The office of Dr. Felix Acholonu provides a range of OB/GYN health services to the people of Jacksonville. He is committed to providing the highest level of patients care. The services he provides include but are not limited to:

y y y y y y

Urogynecology and the Treatment of Urinary Incontinence Advanced Laparoscopic Procedures (including laparoscopic hysterectomy) Gynecological Surgery y Hysterectomy Endometrial Ablation y Consultations PMS Management y Evaluation and Treatment of Infertility Essure Procedure

He specializes in the care of Obstetrical patients, performs annual well-women’s exams, diagnosis and treatment of Cervical Dysplasia, Uterine Fibroid, Menopausal Care Breast Health, Endometriosis, Contraceptive Management and Adolescent Health. Dr. Acholonu enjoys speaking to youth groups regarding prevention and treatment of sexually transmitted diseases, teen pregnancy, bringing to them other evidence based issues that affect today’s adolescents. The office accepts most major health insurances and is accepting new patients. Current insurance card and co-payment (if applicable) are required at the time services are rendered. Membership: Dr. Acholonu is a member of North Florida OB/GYN Associates, P.A, and is a Divisional Director, for  St.Vincent’s Division Five

2 Shircliff Way, Suite 920 (9th floor of the DePaul building) Jacksonville FL, 32204

(904) 387-1401 Entrepreneurs Anchor Magazine

July 2010

41


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Q: What do you see as the best way to stay connected to prospects? What is the frequency you recommend? A: Building and maintaining relationships is very vital for entrepreneurs. I recommend communicating with your clients and potential clients at least once a month in multiple ways. Social media is a great way to connect with your clients. In addition, sending an email, a hand written card or post card in the mail, followed by a phone call reinforces that you want to stay connected with them. It also let’s them know that you are still doing business. Depending on your industry and the type of relationship you have with your clients will determine what form of communication works best for you. Florence Haridan Gathering Coaching Consultancy

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mygani.com l (904) 860.8440 42

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July 2010


Business s l l a f t i p Planning n i d i o v to a by Ethelbert Nwanegbo

The act of writing a business plan is a process of creating a bond of understanding and relationship between the user of the plan and the proposed idea. It is a tool that helps the user of the plan to understand the viability of a proposed idea through a methodical test of variables underlying the feasible characteristics of the plan. Hence, the plan has to describe the intended product to be offered, the industry outlook or analysis, the process of creating value, the target market, the marketing strategy, the revenue strategy, and the financial projections which enables the user to analyze the investment payback period. Business planning is not an academic exercise or a mere process of producing a report. Each business and its personality are different; hence, the business plan should reflect this. Why Write a Business Plan – A business plan is a guide for future line of actions. It helps the user see the future of the business from the present. It helps the user think about long term strategies and goals and how the execution of present strategies impacts the future of the venture. Users of the business plan should understand that it is not about starting a business, neither is it about the actions taken to-

day; it is about staying in business and staying motivated as each executed strategy brings the business owner to their long term goals. Business plan users use the plan to analyze the viability of an idea, ensure the business is going to be profitable, understand the extent of the financial needs, and the barriers to success. A business plan enables the users to anticipate problems; the research and information gathering process creates and increases the business owner’s knowledge of the industry, thereby helping the managers to make an informed business decision. An effective business plan will play the role of a reality check by raising questions that will help inspire solutions before crisis occurs. The SWOT (Strength, Weakness, Opportunities and, Threats) analysis in a business plan helps

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the business owner identify areas that needs improvement and areas of strength that could give the business owner a competitive advantage. The following are some of the pitfalls found in most business plans:

More so, sensitivity analysis can be conducted on interest rates, yields, production variables, or any other quantitative measure that is relevant to business success.

Too Much Detail – Every business requires certain key information which must be present to enable the user to understand the following: the strategic direction of the venture, how the business will create value, to whom the value will be created, how the business will generate a revenue, revenue strategy, timeline of return of invested capital, and how the business will sustain itself over the long run. There is a fine line between too little and too much detail in a business plan. Trivial items that dilute or mask the critical aspects of the plan should be avoided.

Proper Identification of Implementation StrategiesMost business plans communicate the plan without properly identifying the human capital necessary for the implementation of the plan or strategy. Most investors will be interested in reading about the skills of the management and other key personnel involved in the execution of the plan. A poorly implemented or executed business plan is as good as no plan. A good proposal will identify and detail the management teams, the qualifications of the management team, and other relevant experiences needed to operate the business venture.

Lack of Executive Summary – The executive summary tells every user of the business plan what to expect in the document. It could kill or create an appetite in the user for the proposed investment. Many readers of business plans will not read past the executive summary. If it does not exist, they may not read the plan at all.

Identification of Anticipated Problems – No business venture is immuned from risk, bottlenecks, or unforeseen contingencies. A good business plan or proposal will identify and recognize potential roadblocks that could arise in implementing the plan and provide contingency plans to mitigate them.

Inability to Communicate the Plan – The communication of the plan is the key to understanding the strategic direction of the business plan. The business plan should clearly outline the proposal in understandable terms. Colossal ideas are worthless if they cannot be communicated in a clear and concise manner in the business plan. The flow or sequence of information is vital to the understanding of the business plan.

Product Offering - A business plan should clearly explain the attributes of the products to be offered and target market need for the product. If your business idea is not trying to meet a need or solve a problem, your product is not needed and no one will consume or use your product. An entrepreneur can often become so intrigued by his/her idea that he/she forgets about the big picture.

Measurability of the Stages of the Plan – A good business should be broken into stages; every stage must have a goal to be achieved and how the goals will be measured. The measurability of the stages of the plan is crucial if the owner of the plan is seeking for capital from the bank or investors. Most investors or banks will be willing to take risk in stages as the goals of each of the stages are met. Every stage of the business plan should also detail how the capital invested and goals achieved increases the value of the business. Correlation and Sensitivity Analysis - All quantitative aspects of a business plan should be tested for correlation and sensitivity. The dollar values in the projections should be very reasonable and must correlate to the revenue strategy, marketing strategy, and other measurable information communicated in other sections of the business plan. The most common areas tested are revenues and expenses; capital needs and capital use, and projections of annual growth. 44

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Focusing on Production Estimates - When making projections, the focus needs to be on sales estimates, not production estimates. Production is irrelevant if there are no buyers. Unrealistic Financial Projections - Potential investors are certainly interested in profitability so that they may earn a return on investment. However, unrealistic financial projections can quickly cause a plan to lose credibility in the eyes of investors. Technical Language and Jargon - Technical language, acronyms, and jargon that would be unfamiliar to a person without experience in a particular industry should be avoided. The reader or user will be more impressed if he/she understands the plan and the flow of the ideas.


Self Assessment

Experience Assessment Location Assessment Capital Assessment

Decide on the Legal Form for the Business Choose & Register a Business Name Legal Requirements Assessment Get Licenses and Permits

Write a Business Plan/ Feasibility Plan

Set Up Other Professional Relationships

Identify Small Business Resource Centers

Set Up a Relationship with an Attorney and Accountant Develop and Set Your Pricing Strategy Develop a Marketing Plan

Obtain Office Space, Equipment and Suppliers Risk Assessment and Insurance

Setup Recordkeeping and Financial Management System Be Ready for Your First Client/ Customer Hire Employees

Develop a Day-to-Day Managerial Plan

Check if completed

3 Business Checklist

Items to be completed

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Are you connected? by Felicia Wright

Social media ...does Twitter, Facebook, LinkedIn, sound familiar? First let’s start by defining social media. Social media includes various on-line technology tools that enable people to communicate via the internet to share information and resources. Being able to strategically utilize these networks will tremendously increase your company’s visibility and ultimately its profit. But, just having a Twitter account or Facebook page isn’t enough. You need to be actively engaged with your audience on a consistent basis. As a business, you want to keep things professional, but with an added personal touch. People conduct business with people, not the company. This is especially true for small businesses. Below are some tips to help you get started:

Tip: After meeting with someone at a networking event, send them an invitation to connect on LinkedIn. This is a great way to stay in touch with that person, and also create a customer database for you to use in the future.

In this day of instant messaging, short cuts are an easy way to get caught-up in using abbreviations, but it is very important as a business to remain professional. Be cautious of your grammar and tone. Depending on your audience, it may be perceived as unprofessional. Sometimes, written words have a connotation or feeling that aren’t necessarily what the writer intended. Not only is the content you post, a reflection of the company, but also the content others post. Make sure you are aware of what others post on your company’s page and put disclaimers if necessary. You may have to disconnect from them in the best interest of the company, as well as your personal integrity. Tip: Don’t just post “sales information”, in an effort to make a sale. Give your audience valuable information they can use. This will not only increase your chances of them actually reading it, but over time when you do post-sales information, they will be inclined not to disregard it.

As mentioned before, using social media can be very time consuming. Try to schedule one or two days a week where you log on and add new content. Also, you want to make sure you or someone in your company can monitor the sites to respond to any inquiries in a timely manner. Your posts should be conversational, not scripted. However, you should have goals set to determine the company’s purpose. Are you are trying to increase visibility of the company, gain new clients/customers, or promote events? Having goals set in place will help you to be more strategic, and the ability to determine what is working and what is not working.

Content

Management

Social media is fairly simple to use, but it can be time consuming. Many of the social media sites have integrated links to each other. There are also third parties you can use that will post your information in one click, and help you to manage your content. Some examples are: ping.fm, hellotxt. com, spredfast.com, and ratepoint.com. Additionally, Facebook has a marketing integration for businesses. The system will email you a weekly update on how many likes/ comments your page has, and how many people visited the page. You can also view the “Insights Page,” where it gives statistics on who is on your page-- male, female, and their demographics. Use this information to hone-in on your true target audience.

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Brand

When setting up your social networking sites, make sure you include your logo, company colors, photos or any other reinforcements to give consistency to your brand. Tip: Upload photos of your projects or activities you are doing with the company. It’s a great way to showcase your portfolio right on Facebook. It’s like having a piece of your website embedded into Facebook. Many times, people will go to your social media page before they visit your website.

Personal Touch

Organizations

Join organizations with whom you share the same common interest. This is a great way to meet people and also obtain useful information. Tip: Post a question or answer one. You will be surprised at the feedback you get. This information can also be used to create marketing data for your business. Using social media for your business as a marketing tool is a great asset. It is a way to communicate with a large audience on a broad scale. Although, social media is a great reinforcer to your marketing efforts, it shouldn’t discount traditional marketing. Find out who your audience is and how they communicate. Get connected!


is your pc making you unhealthy? By Bryan Smith

Recent studies have shown that the average adults spend over 8.5 hours per day in front of a screen. This includes computers, PDA’s, GPS devices, cell phones and etc. The majority of this time is spent utilizing a computer or smart devices that can have serious impacts on our health as we know. Technology has become an integral facet of our everyday lives. We have become dependent on electronic devices to communicate and efficiently conduct business at all hours of the day. Improper usage of these devices may lead to serious health impediments and even permanent damage in some cases. Most common of all is repetitive strain injury due to frequent repetitive motion such as typing, mouse clicking and use of the thumbs for composing text messages. There was a period that ergonomic devices entered into the market to prevent carpal tunnel syndrome. Ergonomic keyboards and mice help to alleviate the strain and improper positioning, yet they do nothing to lower the frequency or repetitive of use. Reducing the duration and frequency of repetitive motion is the key to preventing deleterious effects of everyday computing.

Software such as Workrave (www.workrave.org) is great for offsetting RSI related incidents. As you use your computer Workrave monitors your mouse clicks and movements, keystrokes and time at the pc. Active usage prompts a micro break which interrupts the screen from usage and displays a micro Break countdown timer with exercise tips and useful stretching exercises. Users can opt to skip a break or postpone it for later. Workrave also calculates the number of skipped breaks and overdue break time. Please consult your boss regarding “over-due” break time; it might not go over well with the top brass.

RX

The strong points of this program are its granularity of information and usefulness in the workplace. You can connect each system running Workrave to each other thereby preventing users from working during their breaks. Each instance of the program tracks users and data, so if you flee to another system you’ll be greeted with a break timer from your original workstation. Installing this software might just keep you off the operating table! Workrave is an Open Source program that is free to use and download on multiple platforms including OSX, Windows and Linux. Visit www.workrave.org to download Workrave.

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Business Legal Str Legal Issues

Sole Proprietorship

Description

The profits and losses of the business are reported on the tax return of the owner there is no separate business filing.

The association of two or more people to own a business jointly and share profits and losses of the business as spelled out in the partnership agreement. General Partnership: Each partner is responsible for the full amount of all the debt and liabilities of the business. Limited Partnership: The limited partnership allows for one or more limited partners. The partnership must also have a general partner who has personal liability for all liabilities of the partnership.

Legal Liability

Unlimited

Unlimited for general partners Limited for limited partners

Transfer of Interest

Very easy

Difficult unless properly documented in the partnership agreement

Continuity of Entity

Limited to the life of the owner

Limited or as documented in the partnership agreement

Difficult- limited to what the owner can secure

Easier- pooling of capital, easy access to capital

No business tax. Owners taxed directly

No double taxation (No business tax). Partners are taxed directly based on their share of business income and other compensation received.

Schedule C with Form 1040

Form 1065; Distributes K-1s to partners

Sole proprietors have unlimited liability. Difficulties in raising funds. Some employee benefits such as owner’s medical insurance premiums are not directly deductible from business income (only partially deductible as an adjustment to income) .

Partners may have different visions or goals for the business. There may be unequal commitment in terms of time and finances. There may also be personal disputes Partners are personally liable for business debts and liabilities.

Flexibility, independence, no red tape

You have a shared financial commitment. Ability to pool resources, expertise, and strengths. There are limited startup cost. Ease of formation.

Acquisition of Capital Taxation of Income Tax Filings Required

Disadvantages

Advantages

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Partnership


ucture at a Glance (C-Corp.)

S Corporation

LLC

A corporation is a legal entity created under a particular business statute. This legal entity may be owned by one or more shareholders. The owners may be natural persons or other legal entities. A corporation is regarded, in law, as having existence entirely distinct from that of its owners.

S-Corporations have features similar to a partnership. S-corporation allows owners to elect to pass corporate income, losses, deductions and credit to their shareholders for federal tax purposes. An S Corporation must have at least one shareholder, and cannot have more than 100 shareholders.

A Limited Liability Company (LLC) is a business structure allowed by state statute which has the characteristics of both a corporation and a partnership.

Limited

Limited

Limited

Accomplished through stock transfer

Accomplished through stock transfer

Varies; may affect the tax status of the entity

Unlimited

Unlimited

Varies; may affect the tax status of the entity

Capital raised through the issue of stock or debt instruments

Acquired through the issue of stock

Members capital contribution

Double taxation- Corporate tax and distributions to shareholder are tax

Taxed directly to shareholders- no double taxation.

Generally taxed at the partnership share of partnership income shown on the K-1; an LLC may elect to be taxed as a corporation Depends on the classification of the LLC ( Single, Multiple or election to be treated as a corporation)

Form 1120

Form 1120S; distributes K-1s to shareholders

Too much formalities and paperwork Disclosure of Names of Corporate Officers and Directors. Most states do not require that names of shareholders be a matter of public record. Tax Consequences- C corporations have potential double tax consequences.

Numerous regulations and requirements Like a C Corporation, it can be costly to set up and follow corporate formalities. Close scrutiny by the IRS of shareholder-employees.

Limited Life - LLC is dissolved when a member dies or undergoes bankruptcy . Going Public -Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure. Added Complexity.

Limited Liability. Corporate Tax Treatment. Attractive Investment. Perpetual Existence. Freely Transferable Shares.

S Corporation may not be the subject of a public offering. The shareholders of an S Corporation are limited in the amount they can deduct as a result of business losses. S Corporations may not deduct the cost of fringe benefits granted to employees who have more than a 2% ownership interest in the corporation.

LLCs provide personal liability protection for members. Ease of formation Members can draw up their own contract, allowing for flexibility in management and responsibilities.

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calendar of events

To register for the events listed below go to entrepreneursanchor.com. Seating is limited.

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August 16 Starting and Branding a Non-Profit (Not For Profit) 9:00am - 10:30am PowerHouse Anchor Management Consulting 1884 Dean Rd, Jacksonville, FL 32216 Contact: c.cain@phanchor.com (904) 265 - 0765 August 18 Got an Idea? Learn How to Turn your Ideas into DollarsWriting an Effective New Product Invention Plan 9:00am - 10:30am PowerHouse Anchor Management Consulting 1884 Dean Rd, Jacksonville, FL 32216 Contact: c.cain@phanchor.com (904) 265 - 0765

August 23 Writing an Effective Marketing Plan for your Business 9:00am - 10:30am PowerHouse Anchor Management Consulting 1884 Dean Rd, Jacksonville, FL 32216 Contact: c.cain@phanchor.com (904) 265 - 0765

August 26 Personal Branding Workshop for Professional Women Sponsored by Regions Bank 6:00pm - 8:00pm Fairfield Inn & Suites (Jacksonville Airport) 1300 Airport Road, Jacksonville, FL 32218 (904) 860-8440 • www.mygani.com August 30 Effective Business Planning Workshop for new and existing businesses 9:00am - 10:30am PowerHouse Anchor Management Consulting 1884 Dean Rd, Jacksonville, FL 32216 Contact: c.cain@phanchor.com (904) 265 - 0765

sept

September 6 Strategies to Growing your Business Venture Workshop, Part I 9:00am - 10:30am PowerHouse Anchor Management Consulting 1884 Dean Rd, Jacksonville, FL 32216 Contact: c.cain@phanchor.com (904) 265 - 0765

September 8 Getting Huge Tax Bills at the End of the Year? Learn How to Cut your Tax Bills with Effective Tax Planning 9:00am - 10:30am PowerHouse Anchor Management Consulting 1884 Dean Rd, Jacksonville, FL 32216 Contact: c.cain@phanchor.com (904) 265 - 0765

September 13 Strategies to Growing your Business Venture Workshop, Part II 9:00am - 10:30am PowerHouse Anchor Management Consulting 1884 Dean Rd, Jacksonville, FL 32216 Contact: c.cain@phanchor.com (904) 265 - 0765

September 20 Strategies to Growing your Business Venture Workshop, Part III 9:00am - 10:30am PowerHouse Anchor Management Consulting 1884 Dean Rd, Jacksonville, FL 32216 Contact: c.cain@phanchor.com (904) 265 - 0765

If you would like to have an event listed in Entrepreneurs Anchor Magazine email information to info@entrepreneursanchor.com 20 days prior to the next issue. 50

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calendar of events

To register for the events listed below go to entrepreneursanchor.com. Seating is limited.

oct

October 11 Reading and Understanding your Financial Statements Part 1 (For Profits and Non-Profits) 9:00am - 10:30am PowerHouse Anchor Management Consulting 1884 Dean Rd, Jacksonville, FL 32216 Contact: c.cain@phanchor.com (904) 265 - 0765

October 25 Reading and Understanding your Financial Statements Part 3 (For Profits and Non-Profits) 9:00am - 10:30am PowerHouse Anchor Management Consulting 1884 Dean Rd, Jacksonville, FL 32216 Contact: c.cain@phanchor.com (904) 265 - 0765

October 18 Reading and Understanding your Financial Statements Part 2 (For Profits and Non-Profits) 9:00am - 10:30am PowerHouse Anchor Management Consulting 1884 Dean Rd, Jacksonville, FL 32216 Contact: c.cain@phanchor.com (904) 265 - 0765

October 27 Getting Huge Tax Bills at the End of the Year? Learn How to Cut your Tax Bills with Effective Tax Planning 9:00am - 10:30am PowerHouse Anchor Management Consulting 1884 Dean Rd, Jacksonville, FL 32216 Contact: c.cain@phanchor.com (904) 265 - 0765

If you would like to have an event listed in Entrepreneurs Anchor Magazine email information to info@entrepreneursanchor.com 20 days prior to the next issue. Entrepreneurs Anchor Magazine

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For more information, visit www.phanchor.com or call Toll Free (866) 566-8618 • Local (904) 265-0765

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