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Volume 2 Issue 6


Monumental Report

Special points of interest:  Ways to Avoid Small Business Failure.

Implementation of the “New” Tax Regime There was a major change in this years 2011/2012 Budget with the following measures being implement by the Ministry of Finance. Stamp Duty on Refinancing and Transfer of Existing Mortgages Refinancing of a mortgage for equal amounts or less, Stamp Duty will be payable at the nominal rate of $100. Where there is an increase in the value of the mortgage, the applicable duty rate will be payable on the difference. Currently the stamp duty on the refinancing of a mortgage is generally levied at 0.625 per cent of the principal being refinanced, plus a flat fee of $500 for the power of attorney that is included. This initiative lowers the cost of refinancing a mortgage. The minister indicated that this reduction in the stamp duty was done to increase access to the lower rates of interest that currently exist in the market this stamp duty reduction was also applied to motor vehicle loans and other loans. The removal of Transfer Tax and Stamp Duty on Registered Corporate Bonds to facilitate the issuance and trading of the bonds (securities), Stamp Duty and Transfer Tax were also removed and the exemption will extend to all companies whether or not registered on the stock exchange. Transfer tax of four per cent applies to the transfer of Jamaican property such as securities, land, a lease of land, and beneficial interest under any

settlement of these properties. “Debentures” are defined in the Transfer Tax Act to mean “ any debentures, debenture stock or bonds of a company, whether constituting a charge on the assets of the

company or not”. based on these definitions in the Transfer Tax Act, any bond of a company, including commercial paper, would fall into the definition of a debenture and be considered a security that attracts transfer tax and stamp duty whenever they are transferred or there is a transfer of the beneficial interest under any settlement. Reduction of Fees on Probate & Reduction of Transfer Tax on Death for estates that are in the system, as at April 27, 2011, the fee (Stamp Duty) on Probate and Letters of Administration for applications filed on or before April 27, 2011 will now be a flat $5,000. Where payment has been made on the old basis, no refund will be allowed and transfer tax on death for those applications will be chargeable at the rate of 1.5 per cent,

down from the current four per cent. Where deposits on transfer tax have been made in excess of 1.5 per cent, no refund will be allowed. Thereafter, fees will be applied as ad valorem stamp duty, as f o l l o w s i. Estates whose net value is $10 million or l e s s : $ 5 , 0 0 0 ii. Estates whose net v a l u e i s : • above $10 million and below $20 million: $ 1 0 , 0 0 0 • above $20 million and below $30 million: $ 1 5 , 0 0 0 • above $30 million and below $40 million: $20,000 • above $40 million: $25,000 The applicable transfer tax on death is reduced from four per cent to 1.5 per cent. This measure was put in place to clear the number of probates that are currently on hold due to persons not having enough cash available to pay the relevant fees and transfer taxes. Amendment to GCT Act Effective May 2, 2011, the time that GCT registered taxpayers who purchase machinery or equipment valued $100,000 or more, have to wait to claim the input tax credit be reduced from 24 months to three months. this measure was put in place to accelerate the GCT refund relating to this input credit.

 Improve your chances of getting a Business Loan  Tips for Choosing your Marketing Consultant  Nine Major Marketing Mistakes  Questions to Ask before starting your next Marketing Campaign  Why you must register you business

Inside this issue: 5 possible ways to avoid business failure


Improve your chances 3 of getting a bus. Loan 12 Tips to Bank Loan Approval


Tips for choosing your 5 Marketing Consultant Nine Major Marketing Mistakes


5?s before starting a Marketing Campaign


Reasons why you must 8 register your business

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Volume 2 Issue 6

Strategy - Six Ideas on Strategic Planning for the Small Business Owners of small businesses tend to have little skill at or understanding of strategic planning. The challenges of marketing, closing sales, and delivering services to clients takes up all the time. There rarely seems time to plan, to put together strategies, or to execute strategically. For our purposes here, let's define strategy and strategic as planning that is intended to accomplish a goal that details the sequence of activities that will most effectively and efficiently bring about desired results. . Let's look at some ideas the small business owner can use for strategic planning. 1. Regularly set aside time for strategic planning - ideally quarterly. Plan to revisit and revise your strategy every three months. During these quarterly sessions, examine your progress and explore next steps. If you only do strategic planning once, typically you won't produce strategic execution or any results. Your strategy must be a living document that you revisit and revise regularly. 2. Once a week, revisit your strategy and incorporate real-time updates. What's changed since last week? What have you accomplished? What's next? What's your focus for the upcoming week. How do you need to change your time-line? This weekly session doesn't have to take a lot of time. Because you do it weekly, it could conceivably take as little as 15 minutes a week. 3. Consistency - in planning, revising the plan, and execution - is key to success. Working strategically once in a while, won't bring good or predictable results. Planning and executing week after week, quarter after quarter will take you where you want to be. 4. Maintain your focus on the single activity

you've identified as next for your strategy. You arrange your strategy in sequence, clearly identifying how activities precede or succeed each other. You always know what action is next to be taken. The logic is obvious. You don't have to spend time figuring out what to do next or waste time because prep work wasn't done first. Because of planning, you execute to avoid these problems. It is easy to remain focused on the single activity you've identified as next for your strategy. 5. You think through and document - in advance - any areas where you lack skills, experience, research, or knowledge. As part of executing your plan, you work on filling in those gaps. The result is that you don't find your strategy stopped dead at any point for want of preparation or knowledge. You're ready. You know what's next. You've prepared in advance. At every step of the way, you've got what it takes to succeed. 6. Don't be pulled off track by off-strategy distractions. Modern life is filled with distraction, and we're constantly bombarded with demands for our time and attention. Use your strategy as a "road map" and stick to it. This doesn't mean that you can't make adjustments, changes, additions or revisions. You'll be doing this in your weekly and quarterly planning. Just make sure that any changes really contribute to your strategy. If you're a small business owner, commit yourself to strategic planning. It's the fastest and surest way to accomplish what you want with your business.

Implementation of the New Tax Regime ¡Reduction in Import Duties on Motor Vehicles Effective May 2, 2011: a) the CET applicable to motor cars (including SUVs) be reduced from 40 per cent to 20 per cent

b) The CET on vehicles commonly referred to as pickups be increased from 10 per cent to 20 per cent The CET on bikes with engine sizes below 300 cc and 600 cc be reduced to 10 per cent and 20 per cent, respectively d) the CET on all-terrain vehicles (ATVs) be reduced to 20 per cent. e) the CIF value to which the current 20 per cent duty concession is applicable be increased from US$25,000 to US$35,000 (J$3m). The US$25,000 was implemented in 2003. f) the GCT payable on second sale vehicle be increased. g) a licensed taxi operator who acquires a bus, with less than 10 seats, for public transportation pay aggregate duty of 36 per cent (diesel). h) the annual motor vehicles licensing fees be increased by $1,000 (including motor bikes). This is applicable to fees which are currently below $12,000.

cont pg 1

This measure reduces the import duties on motor vehicles, making new vehicles cheaper to purchase and reducing the value of motor vehicles currently owed. However, the largest decrease in import duties appears to be on the largest cars and SUVs (ie cars with engines in excess of 3.5ccs). Introduction of a mandatory national compliance programme Aimed at improving revenue collection from sectors that have low compliance rates, the minister announced the introduction of a mandatory national compliance programme that would target professionals such as doctors, lawyers, accountants, etc. Thus, all professionals will be expected to prepare and file Income Tax Returns irrespective of whether they are self employed or receive their income solely from employment in the private and public sectors. This initiative also includes the appointment of Tax Inspectors who will be mandated to carry out surprise tax audits at these professional bodies. Also, persons operating on s cash basis will be required to pay over GCT collected by the 15th of each month.

“Plan to revisit and revise your strategy every three months. During these quarterly sessions, examine your progress and explore next steps. �

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Volume 2 Issue 6

Marketing your Business With No Marketing Budget By Sydni Craig-Hart

Marketing a service business will require an investment of your time and financial resources. What if you don't have a lot of money to spend on marketing? Now what? Does that mean you simply cannot market your service business and your only hope is waiting on the sidelines for someone to hire you? Not at all! Today is the day you learn that marketing a service business with a minimal budget is not only possible, it's easier than you think. One of the first steps in marketing a service business is to get your branding in place. Make sure your business name, your tag line and your logo are all connected - that they send a consistent, positive and results focused message. Your brand is what prospective clients will remember you by. You've only got a few seconds to make a first impression, especially online, so make sure you have your ducks in a row - everything about your brand should be clear, concise and consistent. Once you have these critical elements in place, it's time to use them. The most important thing you need, once you have a brand, is a social proof. You need to be able to showcase how others have benefited from working with you. If you have a contact who will recommend you to their colleagues and friends, you have the beginnings of a client base. If you are just starting out your business and don't have any success stories to share, you need to create some.

I'm not advocating that you do anything unethical here. Don't make up a testimonial or pay your Mom to write one for you. Instead, offer a sample of your services free of charge to a friend or acquaintance in exchange for their positive feedback. (Obviously you have to over-deliver on what you promised!) Post the testimonial and their headshot on your website and you have just begun marketing your business! Repeat that action a few of times and your success stories will start shaping up.

OK, so you have a little branding set up and you have a testimonial or two. Now it's time to get out there and make yourself known. Leveraging social media is a great way to do this! Here are a few tips to get you started: Get social- create a page on Facebook, a profile on LinkedIn and a bio on Twitter. Schedule 30 minutes each day to update your profiles, connect with ideal prospects and participate in conversations. Your goal is to share helpful information that relates to your services and positions you as an expert, but be careful to, not go into sales mode. Let folks know who you are and how you have the answers to their problems. Don't just tell them you have the answersgive away a little bit of your expertise and show them you have the answers.

to use for marketing your service business. This site is excellent for connecting with people you know- former employers, colleagues, college connections- and they can set you up with other people they know. Getting great results with social media marketing is all about being strategic in your efforts. This means you want to spend your time on sites where your target market hangs out, engage others in conversations and get to know then and then follow up with them to expand your network. Don't get caught in the trap of spending TOO much time on social media sites. It's easy to lose hours posting and connecting to people. Set a timer if you need to. Accomplish your goal and then move on with the next part of your day. Marketing your service business without a budget really is possible. It just takes time, effort and some creativity to show ideal prospects who you are and how you can help them solve their greatest challenges.

LinkedIn is another great site

Don't get caught in the trap of spending TOO much time on social media sites. It's easy to lose hours posting and connecting to people. Set a timer if you need to. Accomplish your goal and then move on with the next part of your day

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Volume 2 Issue 6

5 Types of Budgeting Money Methods By Michael Kastler There are so many personal finance programs and books on the market, trying to decide where to begin can make your head spin. Besides the myriad of options on the store bookshelves and online sites, there are dozens of popular, national programs that can cost hundreds of dollars. People spend over thousands on such programs and upon completion ask the question, "okay, how do I get started." Despite all the options available, getting started with a budgeting process can be fairly simple. There are just a few categories of budgeting tools available. I'll give a brief description of each one and you can decide what's best for you . Budgeting Money Method #1: Pencil, paper and calculator Certainly the oldest method around, it works fine but has it's drawbacks. Access to the budget forms is the easy part. You can either create some simple forms on paper that you're comfortable with or you can search for the forms online that you can download for free or very inexpensively. That's the easy part. The downside of the pencil and paper method, even with assistance of a calculator, is that the user must know the basic financial calculations. Even if you are savvy in the mathematics, there is the issue of lack of speed, accuracy and repeatability. Making changes is difficult at best and each month the process and amount of time needs to be repeated. With the amount of effort required, most people simply give up. The pencil and paper method is good, however, for first time budgeters that need to keep track of your daily spend. Keep a piece of paper in your wallet or purse and write down everything you buy, even if it's on credit card or via check. Doing so will enable first time budgeters to establish a baseline of where their money is going. (Cost: approx $0) Budgeting Money Method #2: Computer Spreadsheet such as MS Excel Most computers have some type of computer spreadsheet program such as Microsoft Excel or Apple Numbers installed. Such a spreadsheet program allows you to create an electronic form (called a spreadsheet), embed all the financial calculations and then simply enter your financial data. The computer does the calculations dynamically and you can see your results interactively on the screen. There are several advantages of using a computer spreadsheet: • Time savings increases each month • Accuracy of the calculations • Repeatability month after month The downside, If you are not an expert at MS Excel or the finance calculations, it will be difficult to create your own budgeting forms from scratch. However, there are some excellent MS Excel budgeting forms on the market that are "ready made" for first time budgeters. Some of these MS Excel forms will even generate pie or bar charts to display easy to understand. Do some research online and find one that meets your functional requirements and meets your budget. Make sure your computer has the MS Excel program installed on your computer. (Cost: less than $20 for the forms; MS Excel extra if not already installed on your computer). Budgeting Money Method #3: Computer programs such as Quicken Many of these programs have the advantage as broad financial planning tools that can be used for everything from budgeting to wealth management and even

bill pay, but usually lack good budgeting capabilities. My definition of a budgeting is a set of learned behaviours that help you manage your expenses relative to your income and provide you with a plan to get out of debt and reach your financial goals. Many of the computer programs simply look at your past spending habits to create your budget. So if you had a budgeting problem in the past, it is simply carried over to succeeding months. The computer program does not correct any spending or behaviour problem that led to poor budgeting. The disadvantages with these commercial financial planning computer programs include: • Expensive. For Quicken you will shell out $40 for just the Starter Edition, $120 for the Deluxe and $175 for Premier. • Complexity. Again, most are designed for much more than budgeting and can be difficult to use, especially for first time budgeters. • Time incurred in learning and using these programs can be lengthy for simple budgeting requirements • Don't teach good budgeting techniques If you are going to invest that kind of money and time, seek out a budgeting program that actually teaches you how to budget! Budgeting Money Method #4: Online budgeting programs such as mint or Mvelopes Convenient and free budgeting tools are popping up everywhere on the internet and as smartphone apps. The accessibility is hard to beat but which one do you choose? Are online budgeting tools even a good idea from a security standpoint? Let's start with the last question first. You need to be aware and be comfortable with the idea that you are sending your financial data back and forth over the internet. This is very different than online banking. When you perform electronic funds transfer or electronic bill pay through your bank, you have all the protection that your bank has deployed to protect the information. That may not be the case with a non-banking institution set up with online budgeting programs. Just do your research and be mindful of security issues. The advantage of these tools is the ubiquity of having your information on various media when you need it: On your Smartphone when you're shopping, on your laptop when you're at the library or coffee shop, or on your home PC when you're at home. Virtually anywhere you have browser access to the internet you can access your budget to see if you are on track. Budgeting Money Method #5: Behaviour-based Budgeting Method There's a new method I'm proposing which can include any of the 4 methods above, but incorporates a new way of thinking or behaviour. If you apply my definition of budgeting: a set of learned behaviours that help you manage your expenses relative to your income and provide you with a plan to get out of debt and reach your financial goals, then any of the 4 methods above will work because you changed your behaviour! Make a decision today to place budgeting high on your priority list, change your behaviour, and start to see your financial goals realized.

“Just do your research and be mindful of security issues”

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Volume 2 Issue 6

Six Steps to a Better Business Budget by Glenn Curtis You've just purchased or opened a small business and you know your trade, but when it comes to bookkeeping and, more specifically, budgeting, your skill set is lacking. It's OK - the good news is that it is possible to come up with a budget, or at least a good estimation of what will be needed in terms of dollars and cents. Read on for six simple tips that will help you put together a top-notch small business budget Estimating and matching expenses to revenue (real or anticipated) is important because it helps small business owners to determine whether they have enough money to fund operations, expand the business and generate income for themselves. Without a budget or a plan, a business runs the risk of spending more money than it is taking in or, conversely, not spending enough money to grow the business and compete. Budgeting Techniques Every business owner tends to have a slightly different process, situation, or way of budgeting. However, there are some parameters found in nearly every budget that you can easily employ. For example, many business owners must make rent or mortgage payments. They also have utility bills, payroll expenses, cost of goods sold expenses (raw materials), interest and tax payments. The point is that every business owner should consider these items and any other costs specifically associated with his or her business when setting up shop or when taking over an existing business.

What To Do with Revenue With a business that is already up and running, you can make assumptions of future revenue based on recent trends in the business. If the business is a start-up, you'll have to make assumptions based on your geographic area, hours of operation and by researching other local businesses. Small business owners can often get a sense of what to expect by visiting other local businesses that are for sale and asking questions about weekly revenue and traffic patterns. After you've researched this information, you should then match the business's revenue with expenses. The goal is to figure out what an average weekly expense for overhead, utilities, labour, raw materials, etc. would look like. Based on this information, business owners may then be able to estimate or forecast whether they'll have enough extra money to expand their business, or to tuck away some money into savings. On the flip side, owners may realize that in order to have three employees instead of two, the business will have to generate more in revenue each week. Let's look at six tips that will help you plan your small business budgets. Tip No.1: Check Industry Standards Not all businesses are alike, but there are similarities. Therefore, do some homework and peruse the local library companies office of

Jamaica for information about the industry, speak with local business owners, and check the Inland Revenue Department to get an idea of what percentage of the revenue coming in will likely be allocated toward cost groupings. Small businesses can be extremely volatile as they can be more susceptible to industry downturns than larger, more diversified competitors, so you only need to look for an average here, not specifics. Tip No.2: Make a Spreadsheet Prior to buying or opening a business, construct a spreadsheet to estimate what total dollar amount and percentage of your revenue will need to be allocated toward raw materials and other costs. It's a good idea to contact any suppliers you'd have to work with before you continue on. Do the same thing for rent, taxes etc. Tip No.3: Factor In Some Slack Remember that although you may estimate that the business will generate a certain rate of revenue growth going forward or that certain expenses will be fixed or can be controlled, these are estimates and not set in stone. Because of this, it's wise to factor in some slack and make sure that you have more than enough money socked away or coming in before expanding the business or taking on new employees. Tip No.4: Look To Cut Costs If times are tight and money must be found somewhere in order to pay a crucial bill, advertise, or otherwise capitalize on an opportunity, consider cost cutting. Specifically, take a look at items that can be controlled to a large degree. Another tip is to wait to make purchases until the start of a new billing cycle, or to take full advantage of payment terms offered by suppliers and any creditors. Some thoughtful manoeuvring here could provide the business owner with much needed breathing and expansion room. Tip No.5: Review the Business Periodically While many firms draft a budget yearly, small business owners should do so more often. In fact, many small business owners find themselves planning just a month or two ahead because business can be quite volatile and unexpected expenses can throw off revenue assumptions. Tip No.6: Shop Around for Services/Suppliers Don't be afraid to shop around for new suppliers or to save money on other services being performed for your business. This can and should be done at various stages, including when purchasing or starting up a business, when setting annual or monthly budgets, and during periodic business reviews. Bottom Line Budgeting is an easy but essential process that business owners use to forecast (and then match) current and future revenue to expenses. The goal is to make sure that enough money is available to keep the business up and running, to grow the business, to compete, and to ensure a solid emergency fund.

“The goal is to figure out what an average weekly expense for overhead, utilities, labour, raw materials, etc. would look like

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Volume 2 Issue 6

Capital Budgeting

By Elizabeth Morgan

Capital budgeting is a process of planning expenditures incurred on assets whose cash flow is expected to range beyond one year. In other words, it is defined as a process that requires planning for setting up budgets on projects expected to have long-term implications. It can be used for processes such as the purchase of new equipment or launching of a new product in the market. Businesses prefer to intricately study a project before taking it on, as it has a great impact on the company's financial performance. Some of the projects that use capital budgeting are investments in property, plants, and equipment, large advertising campaigns, and research and development projects. The success of a business depends on the capital budgeting decisions taken by the management. The management of a company should analyze various factors before taking on a large project. Firstly, management should always keep in mind that capital expenditures require large outlays of funds. Secondly, firms should find modes to ascertain the best way to raise and repay the funds. The management should also keep in mind that capital budgeting requires a long-term commitment.

The requirement for relevant information and analysis of capital budgeting has paved the way for a series of models to assist firms in amassing the best of the allocated resources. One of the oldest methods used is the payback model; the process determines the length of time required for a business to recover its cash outlay. Another model, known as return on investment, evaluates the project based on standard historical cost accounting estimates. Popular methods of capital budgeting include net present value (NPV), discounted cash flow (DCF), internal rate of return (IRR), and payback period. While working with capital budgeting, a firm is involved in valuation of its business. By valuation, cash flow is identified and discounted at the present market value. In capital budgeting, valuation techniques are undertaken to analyze the impact of assets instead of financial assets. The importance of capital budgeting is not the mechanics used, such as NPV and IRR, but is the varying key involved in forecasting cash flow. The importance of capital budgeting is not only its mechanics, but also the parameters of forecasting the incurrence of cash in the business.

How Budgeting Works for Companies Budgets are an integral part of running any business efficiently and effectively. They serve as a plan of action for managers as well as a point of comparison at the period's end. So how do budgets work, and how can they be used to gauge where a business is going? When most people think of budgets, they think of a typical household budget - given a certain amount of money, how much should be allocated to various expenses? This system usually works fine for individuals, but in the business world there needs to be a lot more involved. Determining how much to spend on various expenses is only half the battle. The other half is for a company to be able to effectively judge its spending performance. Regardless of the type of business, the ability to gauge performance using budgets is a matter of life and death in the business world. It's the first part of budgeting, which determines how much a company has and how much it will spend. These are projected amounts and the company expects to stay within these limits. To figure out the numbers, mangers make use of economic forecasting methods to determine a realistic static budget. Using a Budget to Evaluate Performance So, what happens when the period's over? At period end, it's time to determine whether we fell in line with our planned expenditures. That's when a flexible budget is used. A flexible budget is a budget with figures that are based on actual output. It's then compared to a company's static budget to get variances (differences) between what level of spending was expected and what actually occurred.

- from our business 101 series

A static budget is a budget with numbers based on planned outputs and inputs for each of the firm's divisions. With a flexible budget, budgeted dollar values (i.e. costs or selling prices) are multiplied by actual units to determine what particular number will be given to a level of output or sales. This yields the total variable costs involved in production. The second component of the flexible budget is the fixed cost. Typically, the fixed cost does not differ between the static and flexible budgets. There are tons of variances that can arise in the static budgeting system. The two most basic variances are the flexible budget variance and salesvolume variance. The flexible budget variance compares the flexible budget to actual results to determine the effects that prices or costs have had on operations. The sales volume variance compares the flexible budget to the static budget to determine the effect that a company's level of activity had on its operations. The variances are always classified as either favourable or unfavourable. If sales volume variance is unfavourable (flexible budget is less than static budget), the company's sales (or production with a production volume variance) will turn out to be less than anticipated. If, however, the flexible budget variance was unfavourable (the variance effects eventual cash flows negatively) this would be a result of price or cost. By knowing where the company is falling short or exceeding the mark, managers can do a better job of evaluating the company's performance and use the information to make changes to further streamline their processes.

Every major company in the world uses flexible budgeting - and you can bet that there's a good reason for that.

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MONUMENTAL REPORT CREDITS PUBLISHER Monumental Partners Limited 9 McKenzie close Kingston 8 St. Andrew TEL: 876-969-2646 MANAGING EDITOR Kahlil Harris ASSOCIATE EDITORS Jhenealle Goulbourne MONUMENTAL REPORT CONTRIBUTORS

Elizabeth Morgan Michael Kastler Glen Curtis Kimberly Stansell

Suzi Elton Sydni Craig-Hart DESIGN & LAYOUT Kahlil Harris Randy Fagan SUBSCRIPTION Email us @ or check it out on our website SOURCES The Jamaica Observer Investment forum Magazine Forbes Magazine Ezine Ezine Ms. Allison Peart Senior Partner at Ernest Young and Associates

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Monumental Report - Budget & Planning