Do You See Failure or Success?

by: Heather Dominick

I remember attending a meditation workshop with Mark Epstein, a well-known 'Buddhist psychologist.' He told a story about a meeting he had with Ram Dass, spiritual teacher and author, where Ram Dass had asked Mark Epstein about his work with his patients. As Mark talked about his work, Ram Dass interrupted him and asked, "Do you see them as already healed?" I was so struck by this story. As a coach and healer of businesses, I saw the clarity in this question. So often as solo-service professionals it is easy to focus on our success by looking at ourselves (what we are doing, creating, visualizing, etc.), but the results are incredible when we turn the focus on those that we serve. What do you see when you look at your clients or customers? Do you see failure or success? When I worked as a high school teacher--in moments when my students were working on their own--I would say to myself, "The light in me sees the light in you." I really felt that. I could see my students succeeding long before they could see it or could even venture to believe it. However, I knew as their teacher it was my duty to hold that vision and energy for them and then guide them through the action steps of getting there. It always worked. I have countless high school teaching success stories. I see that same (if not more--I've learned a lot in the past few years) success for the private and Boot Camp clients I work with now. I literally see them as a successful magazine owner, professional organizer, coach, meditation expert, Feng Shui practitioner...and the list goes on. It continues to work. I ask you to begin to apply this to your own business. Here are 3 steps to begin SEEING success in those that you serve. 1)Change the way you look at things and the things you look at change. In Dr. Wayne Dyer's book, The Power of Intention, he sites that, "It turns out that at the tiniest subatomic level, the actual act of observing a particle changes the particle." This is a clear example of energy affecting energy. If I look at you and see your success, then you begin to create more of and be success! How great is that? So when speaking to a prospect, customer, or client, instead of questioning your abilities (wondering if you'll get the sale or joining them in their woes), the most powerful action you can take is to change the way you are looking at the situation. See them as happy, joyful, peaceful, well, successful...and more. You will be effecting a change that will result in more success and abundance for the both of you. (It feels so much better than worry and doubt!) 2)Be constantly giving. The energy of success is constantly giving and the supply is limitless. When you can come from this place in your own business, you begin to attract more into your life. I know when I first heard this, it was hard for me to grasp. Mostly, because I used to come from a place of giving, but have one eye immediately on making sure that I was compensated and at the same time convinced that I wouldn't be. Guess what? I wasn't and I felt a whole lot of resentment at the same time. When I shifted my attention to giving for the sake of the success of those that I was serving and simultaneously confidently took care of what I needed for myself and my business (instead of waiting for someone else to do just do it), there was more success ALL around. 3)Detach from the outcome. When you are able to SEE success, you don't need to be attached to the outcome because you KNOW that it's going to be successful. Whenever you are caught up in accumulating (I have to get this client; I have to sell to this customer), then you lose sight of what your main goal is--to see the success of those that you serve. Find out exactly what's going on for the person that you're speaking to. Ask them and ask yourself, what do they need? The answer to this question is usually multi-layered. (For example, prospects that come to me may need more income from their businesses, but they also need to move through the blocks they've unconsciously set up for themselves that's keeping them from getting more money). So, you then SEE them as getting their needs fully met and begin the process of working with that person, so you can help make it happen. Call To Action: 1) Ask yourself, how do I see my prospects, clients, or customers? Be honest. Just let the answer come. No judgment. It will give you a lot of information. 2) With whatever answer you get now, ask yourself, "How can I improve?" How can I see this situation differently? 3) For one day focus only on those you serve and their success. Write down the difference in how you feel, the results that your clients get, and anything else that pops up.

How I Generated More Revenues Without Having a Sale!

by: Jonathan Marino

You want more revenue and you want it fast. The marketing experts tell you to “create a compelling offer.” You immediately think “Sale.” You wonder how big the sale should be. How much can I afford to give away before the sale starts costing me money? How will I word the sale materials so customers don’t take advantage of me? The worries start and you realize you have a huge task to pull off this sale and generate real revenue. Unfortunately, in our crowded market place, a compelling offer has become synonymous with a “sale.” There are other, better alternatives to motivate customers to buy from you. This article will show you six options that will accomplish your goal of getting more revenues. These options will build a stronger relationship with your customers that the sale will not accomplish. The Limitations of the “Sale” The fundamental problem with most sales is that they are good for the business but not necessarily good for the customer. A sale usually starts with a business problem you want your customers to solve for you. You need more cash. You have excess inventory. You need to meet sales quotas. You want to get ready for new merchandise. Your sale is asking the customer to solve your business problem. There will always be customers who don’t mind being used. Their agenda coincides with your agenda. Quid pro quo. When you create your offering around something they really value, however, they look on your offering differently. It becomes more than just a customer transaction. It is the start or the continuation of a relationship that will result in sales now and in the future. The customer’s primary concern is always how the product or service benefits them and makes their life better. Six Alternative Offerings Convenience Structure your offering around customer convenience and you have a motivation that does not require sales or discounts. At my daughter’s school recently, the uniform company came to the school to sell uniforms. The parent’s alternative was to drive 30 miles into the city to purchase the uniforms at the company’s store. Parents were lined up forty deep to purchase the uniforms at regular prices. This store made convenience a motivator for the parents to shop. Enhance Your Expertise If your customers are buying your expertise, by enhancing that know-how you give them additional motivation to buy your product or service. Suppose you were in the copywriting business. You announce to your customers that you had just completed a copywriting campaign that generated thousands of dollars for a particular business. Customers now see doing business with you as even more desirable. No discounts; no sales! Self-Esteem and Praise from Others Those who market golf equipment say the main motivation for customer purchases is praise from others. “Great shot, Bob. You’re really driving the ball well!” If your product or service involves these types of motivations, repackage your offering to foster self-esteem and praise from others. It has more power than a sale! Tapping into Social Issues (Idealism) I recently worked with an acupuncture clinic. This form of Chinese medicine can heal many ailments and injuries. We chose to focus their acupuncture marketing on the treatments on athletic injuries because of the current scandals involving the use of harmful drugs and steroids. We presented their offering as a safe and natural alternative to more harmful drugs. By presenting an ideal alternative to a current social issue, no sale or discount was required. You can appeal to your customer’s idealism. Popularity People want to be part of the “in-group.” They want acceptance. By repackaging your offering to emphasize the popularity of your product or service, you give people another motive for wanting to buy from your business. Scarcity Scarcity is another motive that drives customers. It can be expressed in limited product or service quantities; limited editions; selective lines of products; preferred customer programs; limited time; or taking advantage of opportunities. There is some greed in all of us. If we feel we are going to lose out, we get very motivated. Conclusion This article has shown you six alternatives to generate more revenue that don’t involve a sale. When you need a compelling offer, start with the motivations that drive your customers to buy from you and then emphasize these motivations. You will find these motives are just as effective as a sale. They will also help you build a better relationship with your customers because you’re doing it for them! http://www.cbmall.com/?storefront=kaboom1131 http://www.cblinkus.com/index.php http://cbglobe.com/x.cgi?id=downloadc1

I Propose

Many companies and their decision-makers require written proposals, and if you are like many sales people, you probably shudder at the thought of this request. However, writing a good proposal doesn’t have to be painful providing you keep a few points in mind. First, recognize that closing the sale in a business proposal is a process, not an event. It doesn’t occur just because you have asked for a commitment or because you have presented all the features and benefits of your product or service. When a customer or prospects agrees to do business with you after reviewing your proposal, it means that you have addressed their key issues and demonstrated exactly how your solution will benefit their company. This requires a bit of strategic planning. Unfortunately, too many sales people spend too much time talking about their company, product or service at the beginning of the proposal. The drawback with this approach is that decision-makers are extremely busy which means they don’t want to waste their time reading something that has little or no relevance to their situation. Salespeople will argue that this information is critical and that they need to present it in order to show how their solution is appropriate to the customer’s situation. While this is true, it is essential to direct your initial focus on the customer and demonstrate that you have a good understanding of your prospect’s issues and concerns. Great proposals often start with an executive summary which highlights the prospect’s current situation or problem and how this issue is affecting the company. This means you need to ask your prospect key questions during your conversations. In the hundreds of sales training workshops I have conducted over the years, I have discovered that the vast majority of sales people fail to ask their prospects sufficient insightful, thought-provoking questions. As a result, they fail to understand the negative impact of a particular problem on the company’s business. However, stating the impact of the problem in your proposal can reinforce to the decision-maker, the importance of implementing a solution. Closing the sale in a proposal means positioning your solution and demonstrating exactly how your prospect will benefit by using your product or service. Far too many sales people forget this critical element. They discuss many of the features and benefits of their solution but they fail to outline the impact of their solution on the prospect’s business. The challenge is that the majority of sales people do not discuss this with their prospect. Therefore, they cannot address it in their proposal. Reduce the prospect’s risk. Many people would rather tolerate working with a vendor who is not performing well rather than make a change because of their fear of the unknown or the pain that is often associated with making a significant change. I once retained the services of a particular individual even though I was not completely satisfied with his work simply because I dreaded the hassle of finding a new vendor. If this is a potential concern of your prospects, then offer some type of reassurance or guarantee to reduce or eliminate this fear. Closing the sale in a proposal also requires some form of action or commitment. Ending your proposal with a feeble statement such as, “If you have any questions please let us know” is not effective. It is essential that you clearly outline the next step(s) you expect from your prospect along with a time frame. Lastly, keep your proposal as brief as possible. Unless your solution is extremely complex, you need to keep it short, clear and concise because executives simply don’t have time to read a fifty page document. Besides, short proposals are usually much easier to read and understand. I recall the very first proposal I was required to present. Because I didn’t know any better, I only included information that I felt was relevant to my prospect and was able to outline a thirty thousand dollar project in just three pages. After we reached an agreement I asked what influenced their decision and was told, “Your proposal was easy to understand.” The bottom line? If you have asked your prospect enough of the right questions and positioned your solution in a manner that demonstrates exactly how your solution is the best one for your prospect, and removed the risk, you increase your ability to close the sale.

© 2008 Kelley Robertson, All rights reserved.

Invest In Yourself – Your Career, Future Income Stream, Education And Training

The advice often given to young couples starting off in life is “Not to buy what you cannot afford”. The same basic advice should be heeded by many. If you cannot afford it- then do not buy the item. But what of investing in your own future in terms of an investment in your personal education or training as well as investments in your own personal career. Is this not getting ahead in life? Is this not money well spent? Even if you have to borrow and go into debt is this not money well spent? If at the end of the day , year or decade you will be much further ahead in position , salary as well as benefits in addition to “job” and “personal” satisfaction is this not money, time and effort well spent and allocated. ? Indeed it is and can well be. In the case of your education a dollar borrowed now will result in better jobs- that you will most likely find more challenging and enjoyable , and have a lot more financial reward than a job on the status scale – say as a bus driver or a technician doing oil jobs at your local Wal-Mart. In the case of a vehicle or car loan it may be a godsend. If your vehicle is not reliable – then how can you show up on time, keep your job without an image and reputation of reliability? Not only do you want to keep your employment and income associated with the job but also the job references from your employment superiors for use with other employers for better positions and pay, or for promotion within your present organization. You may even run into a case of promotion within your present firm to another branch office or plant. Not having reliable transport may limit your promotion offerings and flexibility. In addition, if you take out a loan to purchase that vehicle, you may well have upscaled and upgraded your car or SUV, from the models that you most likely would have purchased. By doing so, and driving a higher grade auto model, you may well appear as a more established, senior, more experienced and established employee as well as individual. Fortunately or unfortunately in life most comes down to appearances and perceptions. There may be a much better and / or better paying job but its way across town, or in an area not served by the bus transit system. Or it may be the case that there is bus service - but if devours a good two to three hours a day of travel time. Good bye to your personal social life. You may have all the money in the world – the wealth of Bill Gates Himself and yet no time or energy to enjoy it. So much for all that pay of that new wonderful job. A real step foreword as they say. It is always a case of reward versus cost or cost versus benefit. It is a case by case analysis. In addition you should think of additional or add on costs. Do not stretch yourself too thin – financially. A course at university may not be offered in your calendar year – you will have to complete your schooling fully at a later date than expected. A course may be full – ditto for time delay. Or you may even have to repeat a course or change plans along the way necessitating longer time duration of studies. Leave a buffer of funding both for yourself and as well with the agency that provided the loan – be at bank, savings and loan, credit union or even parents or relatives. Don’t break the bank so to speak at the first step. The same analysis of benefit versus costs prevails in the car / transport / job scenario situation. Many people will drive across town for a bargain to save a dollar and spend $ 10 on gas costs in the process. Incorporate the price of gas into your final net salary not as an aside. Lastly and most importantly – always pay your bills. Never take on more than you can chew, or in this case afford. Before making that commitment for a loan or undertaking always evaluate carefully before signing on the bottom line. It’s not only a matter of convenience. Your credibility itself is on the line, in addition to your personal honor and integrity and reputation. Pay your bills on time – even earlier than required. This applies to all loans – whether they are for rent, mortgage, utility bills, bank loans, charge card payments or student loans. If you cannot pay in full, then at least pay a bit above the minimum payment. If you are really stuck then contact the lender. Explain the situation honestly. Make a commitment and follow through. Remember the whole point of the exercise was your self improvement – an investment in yourself. To not take the exercise seriously is to shortchange yourself and your future opportunities as well as income stream in the future. To borrow for yourself and personal gain make prudent sense.

How Your Bookkeeping Can Boost Your Tax Deductions

One of the keys to bringing your tax strategy full circle is your bookkeeping. It's one thing to know what's deductible and how to maximize your business deductions, but unless that gets reflected in your bookkeeping, it's as if the tax planning never happened at all. Use this checklist!

One of the keys to bringing your tax strategy full circle is your bookkeeping. It's one thing to know what's deductible and how to maximize your business deductions, but unless that gets reflected in your bookkeeping, it's as if the tax planning never happened at all. Use this checklist!
Use this checklist to make sure your bookkeeping is maximizing your travel, meals and entertainment deductions.
____ Get reimbursed for business expenses you pay for personally. Ever been to a restaurant that only takes cash? Or taken a taxi that only accepts cash? Or misplaced your business credit card and had to use your personal credit card? These are just a few examples of when we have to pay our business expenses with personal funds. It's easy to miss these expenses so keep an envelope handy and put all of your receipts in this envelope. Then you've got it handy when you complete your expense report.
____ Code meals that are 50% deductible to a separate account to keep them distinct from other expenses that are not subject to this 50% rule. Many times I see just one meal account in the chart of accounts. The problem with this is that while meals are generally only 50% deductible, some meals are 100% deductible. The mistake that I see most often when I review a prospect's prior year tax return, is all meals are treated as only 50% deductible (because they are all coded to one account) and there is no strategy to identify meals that are 100% deductible.
____ Code meals that are 100% deductible to a separate account to make sure these are deducted in full and not combined with meals that are only 50% deductible.
____ Code your entertainment expenses to a separate account from meals and travel.
____ Code your travel expenses that are not meals and entertainment expenses to a separate travel account. Too many times I have seen an account named "Travel, meals and entertainment" (it happens to be a default account in a popular bookkeeping software) and everything gets lumped into this account. Business travel is 100% deductible so separate it out as part of your bookkeeping system. Otherwise, you will have to sort through that account at the end of the year, or worse, you may forget to sort through that account and everything in the account is treated as only 50% deductible!
____ Use the memo section in your bookkeeping software to make notes about who, what, when, where, how much and the business purpose of your travel, meals and entertainment expenses. This is a great way to strengthen your documentation.
How does your bookkeeping match up?
Proper bookkeeping will boost your tax deductions, particularly for travel, meals and entertainment. This is an area where deductions are regularly missed and not properly documented, but once you know the rules and use my system, you'll find more and more deductions!
** Important Tip! **
Keep your bookkeeping current! What does current mean? One easy way to make sure you are staying current is to review your Balance Sheet and Profit & Loss Statements once a month. Do this review when you receive your monthly bank statement. Simply reconcile your bank statement and then review your financial statements.
Knowing how to maximize your deductions for travel, meals and entertainment is a key part of a successful tax strategy.

My Very First Board of Directors Meeting...

by: Nick Siegel

I could make up a terrific story about this, but I won't lie - I had avoided (as in postponed, side-stepped, procrastinated) having a board of directors until now. Frankly, I had visions of having a group of old, cranky, humorless men telling me what to do. Of course I was just being lazy, too. I would rather be out making products and building a business than sitting around trying to make sense out of Excel files, charts and graphs, and essentially being bored to death in the process. Our company, however, has reached the point where "proper governance" is important...even necessary. The "let's do it because we all think it's a really good idea" mentality had to go. We really needed to be able to show that all of our shareholders were represented in our decision making - and represented fairly. So I asked my business mentor and close friend, who knows and understands our industry very well, to be the first member of the board of directors. Now let's be clear - I didn't ask him because he's my "friend." That would have shown very poor judgment, and frankly, friends don't always make the best business advisors. I asked him because he's already the one person who advises me on all "board-type" matters, anyway! So imagine this: I felt like a "big grown-up boy" in long pants, carrying my briefcase filled with notes, reports, Excel printouts, etc., to my first board of directors meeting on Friday, February 15, 2008, at 2 PM ET. If you are picturing a large dark paneled room with a long table, think again. Outside our "boardroom" were chickens, squirrels, birds, and other creatures - large and small, wild and domesticated. Inside the "boardroom" (besides the board members) were a dog (a.k.a. The Wolf), two cats (a.k.a. Puffy and Fluffy), and five children. Yes, we were in my friend's home, gathered around his kitchen table. Maybe someday we will meet in that dark-paneled room with a long table. But I don't care how big my business gets - I hope we can continue to meet with the same "family feeling." There was a certain calmness, almost a serenity, about the entire meeting. There was nothing stuffy or even formal, although we did follow the rules of a proper meeting. So my first board of directors meeting started with a brief lesson about what exactly happens at board meetings! My friend and mentor gave a simple, five-minute explanation of what board meetings were all about...and in the process, he completely changed my preconceived ideas. That's what I really want to share today. What Do You Think Is Supposed To Happen At Board Meetings? - Company planning strategy? - Hiring strategy? - Financial planning? No, no, and no. Those are the things that I THOUGHT were supposed to happen at a board meeting, but was I ever wrong. The things listed above are the territory covered by company management...not the board of directors. The board of directors has exactly one responsibility, and that responsibility is... GOVERNANCE Just like a sovereign nation, each company has what they call "articles of incorporation." These "articles" are actually the laws - or rules - that the management of the company must abide by. So the whole purpose of the board of directors is just to make sure those laws are followed. The point is for the board to make sure the decisions that are made in the day-to-day operation of the company are really in the best financial interest of the shareholders. Of course, not ALL of the decisions that are made by management are the right decisions - anyone can be wrong, it's inevitable. But the decisions have to be made within the laws laid down in the articles of incorporation. They can't be sneaky decisions, they can't have malicious undertones, and they can't be decisions that line the pockets of management at the expense of shareholders. Here is just one example of the type of responsibility shouldered by the board of directors: The board does not decide who is hired to fill a position. The board simply "empowers the management" to pursue that hire. It's still management's job to make the final decision about who is hired to fill the position. The board only acknowledges that they understand why the position has been created and filled. The board of directors GOVERNS. It does not strategize. So in the end, I didn't need all those spreadsheet printouts and detailed notes. What I did need was exactly what I got - a lesson in how to think about shareholder value, while simultaneously running the company.

What is in a Franchise UFOC?

by: Bob Richman


There are 4 parts to a UFOC: * Cover Page * Table of Contents * Items 1-23 * Exhibits The format for each of these sections is very specific and covers the following: Cover Page The Cover Page identifies the franchise business, including the name under which the franchisee would operate and what type of business it is. It also includes the amounts of the initial franchise fee. In addition, any additional risk factors are included on the cover in all capital letters. Risk factors that may be included pertain mostly to which state is governing the franchise agreement and where any litigation is permitted to be filed and heard. Table of Contents The Table of Contents contains the specific 23 items listed below, as well as the exhibits, in a standard format. Items 1-23 Item 1: The Franchisor, Its Predecessors, and Affiliates This section gives you a background on the Franchisor, including anyone he/she has purchased the franchise from, and any affiliates, meaning anyone else who has a controlling interest in the franchise. Do your research on these representatives, including a credit check if possible. You're quite possibly investing your life savings with these people and knowing any other businesses in which they have been involved and how well they manage financial aspects is important. Item 2: Business Experience This section gives you a background on the officers and directors of the franchise for the past five years. Similar to the information you will review on the Franchisor itself, you want to carefully review the expertise these people bring to the table. These are the people you will be working with and who will contribute greatly to the success of your franchise. You should get to know them as well as you can. Item 3: Litigation Any history of litigation, including cases terminated by settlement, must be disclosed in this section. Any Franchisor who is under some kind of restrictive injunction is one to stay away from. Additionally, if a franchisor or any officer has a criminal history or any litigation pending that may affect his or her ability to maintain a franchise then this opportunity is not a worthwhile risk. Item 4: Bankruptcy The bankruptcy disclosure requires that they tell you up front about any bankruptcy in the last 10 years concerning, "the franchisor, its affiliate, its predecessor, officers, or general partner". Entrepreneurs often have several failures before they are successful. Learning from failed business is not the experience you want to have, which is why you are considering a franchise. This doesn't always mean that having a bankruptcy in the disclosure is a sure prediction of a bankruptcy in the future, but you want to review the circumstances of the bankruptcy carefully, including the amount of time that has lapsed since that bankruptcy. You typically don't want to give your money to someone with a proven track record of not being able to manage it. Item 5: Initial Franchise Fee The initial franchise fee is the fee you pay to purchase the right to operate as a franchise. This does not include all of the other fees that may be required to get started or continue operation. The important thing to know about the initial franchise fee is exactly what you are getting for those dollars. Knowing how they came up with that number is important. A large initial franchise fee does not equate to a larger earning or a better investment. Consider this fee in addition to the Other Fees (Item 6) and Initial Investment (Item 7) before concluding what it will actually cost to open a franchise. Item 6: Other Fees Other fees include any other monies you will be required to pay to the franchisor, including royalties, advertising fees, service fees, training fees, or any other ongoing or one-time fees that you as a franchisee will be expected to pay directly to the franchisor. Item 7: Initial Investment This is the key item in terms of figuring out what is will cost you to get a franchise up and running. This section is laid out as a table, and includes the estimated costs for training, equipment, opening, inventory and other costs associated with starting your franchise. For each item in the list, you are given the amount, the method of payment, when it is due and to whom the payment is to be made. Review this information carefully. Speak with other franchisees and see if the estimated costs were realistic. Expect that you will need more for unexpected expenses. Remember that most businesses are not profitable for at least a year, so include the amount of money it would take you and your family to survive for a year without income. Item 8: Restrictions on Sources of Products and Services If the franchisor requires you to purchase or lease from designated sources, investigate further. Sometimes the purchase restrictions are because the franchise has negotiated a lower price for certain goods in return for guaranteed orders. However, sometimes the cost of the supplies is not competitive and the franchisor makes a bit of money from the procurement of supplies. This makes the franchise more expensive to run, even if the startup costs look attractive. If the costs are reasonable, the restrictions are not a big issue. Again, talk to existing franchisees to see if they feel these restrictions are reasonable and whether or not they are satisfied they are receiving their money's worth. Item 9: Franchisee's Obligations Your obligations as a franchisee can be laid out in various agreements, including but not limited to the franchise agreement. This section explains what your obligations are and exactly where in the legal documentation you can find the information governing your obligations. This is an important section for you to review carefully, as they define your contractual obligations and if you breech these obligations your franchise can be terminated. Talk to current franchisees and see whether meeting these obligations has presented any difficulty. If the obligations seem unreasonable, move on. Item 10: Financing Sometimes the financing required to start-up a franchise comes from the franchisor him/herself. As with any financial contract, review the conditions and be sure that they are competitive and make sense. Have an accountant or banking representative review the terms and give an opinion. Having a credit check would, again, be handy here. Item 11: Franchisor's Obligations Just as the UFOC lays out your obligations as a franchisee, the obligations of the franchisor must be clearly disclosed in this section. You are putting your financial future into the hands of the franchise that you purchase, at least in part. Be sure you understand exactly what you are getting for what you are paying. You may want to approach this section in a different manner than the others...perhaps backward. Rather than reading what they will provide, begin by making a list of what you think you will need to be successful. Determine what kind of training you will need and see whether they provide it, when it will be offered, what kind of training it is, and whether or not it meets your needs. What kind of ongoing support or documentation do they include? Also determine what you would need after you have opened the franchise and see whether those items are included in their list of obligations. If they are missing things that you think you will need to be successful, ask to have those things added to the franchise agreement. Verbal promises from salespeople are not sufficient - promised items should be added to this section. Item 12: Territory Opening a franchise just to see another franchise open up a half mile down the road would be enough to make anyone crazy. The territory section of the UFOC is designed to lay out exactly what rights you have to any territory. Having the right to an "exclusive area" cuts down on the competition, at least from within your own franchise. Unfortunately, not all franchisees are alike. Some will take full advantage of their area and develop the market to its fullest. Others will assume that the lack of competition in their immediate area means they have a right to the business and therefore don't work quite as hard to develop that area. There are many other situations in which an exclusive area causes issues for a franchisor, and most will not grant them. Some will grant an exclusive area only for a specified amount of time or only as long as a certain level of achievement is reached by the franchisee. Understanding what options the franchise offers is very important. Item 13: Trademarks This section discloses any trademarks, service mark, service name or logotype used in the franchise business and whether or not that trademark or service mark are registered with the US Patent Office. Using a trademark symbol (™) is not the same thing as having a registered trademark. The registered trademark (®) means a certificate of registration has been granted to the franchisor. A trademark registered in the Supplemental Register does not have the same legal rights and there should be a statement in the Trademarks section disclosing this information. Item 14: Patents, Copyrights, and Proprietary Information This section is important to you only if patents are important to the franchise. If so, get a copy of the patent from the U.S. Patent Office and review the status of the patent. Be familiar with any copyrighted or proprietary information outlined in the UFOC, as the franchisor has a right to modify or prohibit use of anything patented, copyrighted, or proprietary information disclosed in the UFOC. Item 15: Obligation to Participate in and the Actual Operation of the Franchise Business This section outlines any requirements for the franchisee to personally be involved in the operation of the franchise. If the franchise does not require the franchisee to run the business him or herself, then there must be a statement outlining whether or not a manager running the day-to-day operations of the franchise in place of the owner must complete the franchisor's training program and/or own an equity share of the business, and any limitations placed on the manager (such as being approved by the franchise). Item 16: Restrictions on What the Franchisee May Sell Restrictions on what you may sell will affect those franchisees who want to operate an expandable business while they own the franchise. This section is also important if you are limited to selling goods or services that won't make you enough return. Item 17: Renewal, Termination, Transfer, and Dispute Resolution This section is one of the most important in the entire document, and is presented in a table format for easy browsing. The best contract is one stating that as long as you do not breech your contract you can renew your franchise agreement, forever. Contracts that place a limit on your possibility to renew solely at the discretion of the franchisor are bad. Also pay close attention to extensive repairs or decoration that will required as a condition of renewal. The amount of money expected to be spent should be reasonable and there should be some kind of formula so that costs are not incurred all in the same year. Additionally, the refurbishment should keep you industry competitive. There are many types of transfers. Transferring among business entities, such as from a sole proprietorship into a corporation, should definitely be allowed. A good agreement will also allow your franchise to be transferred to your heirs. If this is not allowed and you're still interested in purchasing the franchise, try to make some provision for the repurchase of your franchise by the franchisor. This section also outlines the causes for termination of the franchise agreement, states whether the franchise can be sold and who has the right of first refusal (your own blood relatives should not, ideally, come after the franchisor on first rights), and delineates your right to arbitration. Essentially, the more rights you have to control the renewal and transfer of your franchise, the more rights you have for the continuation of your business and the better the agreement. Make sure your franchise attorney reviews these rights as well as your rights to litigation (or requirement to use arbitration). Any additional risks for litigation will also be on the cover page, remember. Item 18: Public Figures This section requires the disclosure of any public figures the franchise uses as a spokesperson, how much they were paid, and how much control they have in the business (if any). Find out how this arrangement relates to you, whether you can use that figure in personal appearances or advertising, how much it would cost and how frequently you would be allowed to do so. Item 19: Earnings Claims It is very tricky for a franchisor to project, estimate, or in any way forecast financial sales. There are so many variables in play for an individual franchise that it would be mostly guesswork and optimism to project for a prospective franchisee how much money they will make with their business. Any claims made by the franchisor to this effect must be substantiated, so rarely will you see any earning claims included in a UFOC. The best way to get an idea of what to expect for earnings is to talk to existing franchisees. Find out how long they've been in business, when the business turned profitable, and what their average profits have been. Remember that each business is unique and that each franchisee does not run a business equally well. Speak to several franchisees to get a clearer picture of a range that you might be able to expect. Item 20: List of Outlets All of the existing franchise locations, along with the franchisee's contact information, is listed in this section. This is the pot of gold, right here. Contacting franchisees with questions about their relationship to the franchisor, their ability to meet their contractual obligations, their general earnings, and how realistic the start-up projections are is the best bit of research and review you can possibly do before purchasing your franchise. Prepare your questions and schedule time with franchees in advance; this one is important. Item 21: Financial Statements This section points you to the exhibits containing the audited financial statements of the franchisor for the last three years. Take these statements to a qualified accountant for review. The financial status of the franchisor is a track record, showing you not only the ability of the franchisor to run the business, but also the likelihood of success or failure. Item 22: Contracts All contracts or agreements a franchisee will need to sign must be attached to the UFOC. This includes the Franchise Agreement, purchase agreements, lease agreements, and others. Item 23: Receipt This document is a receipt of acknowledgment of the UFOC. This has to be provided as the last page of the document for the franchisee to acknowledge that they have received it. This is only important because no monies can legally be exchanged until 10 days after the receipt of the UFOC (the "cooling off" period provided for by law). Exhibits Any documents that have been identified in the UFOC for the franchise to review or sign must be included as an Exhibit. The exhibits will include copies of such things as the financial statements, Franchise Agreement, leases, or Loan Agreements.

What Does RICH Mean To You?

by: Paul Mara

Have you ever been asked that question? I was! Back in 1979 while doing a “pressure cooker” course on selling with an insurance company! I wondered how relevant that question was, considering my personal and financial situation at the time. No wife! No job! I was a solo dad with three children, one of them a baby less than a year old. “You must be kidding”, I thought to myself at the time! What relevance can that have to me learning to sell insurance policies? How naive I was! The course that followed had an unbelievably positive and a life changing effect on me. Although it only took affect several years later. The seed had been sown! You’re probably saying to yourself, “How can a course on selling life insurance have that much effect on anyone?” Well that Insurance Company was the one created by W Clement Stone. I found the course to be very challenging, because in New Zealand at that time we weren’t really aware of the “Hype” that Americans used to motivate their workers to perform at their optimum. It pleases me each time I think about it now, to know that I passed, top of the class and received a book as a reward, this book was already a best seller, but I’d never heard of it. Success Through a Positive Mental Attitude, of which W Clement Stone was co-author with Napoleon Hill. They shared their secrets on becoming wealthy and having a healthy, productive lifestyle, utilising the power of a "positive mental attitude". Sadly my motivation and my persistence waned and I stopped selling insurance. I kept all the information, studies and the book I had won. The “BOOK” Success Through a Positive Mental Attitude, which I never opened or read for probably 3 years. However I did continue two very positive things! I continued to read on a daily basis some of his quotes and I even put them on the wall. My two favourites were; “Success is achieved and maintained by those who try and keep trying” and “Whatever the mind of man can conceive and believe, it can achieve”. The second thing and the one which I believed the most important was “Goal Setting” I enjoyed the challenge and had learned enough during the course to realise its long term value. Life began to take several steps in the right direction not major ones, but positive ones. Several important things happened in my life over the next 12 years. Around 1981-2 I began reading, Through a Positive Mental Attitude, I applied so many of their ideas and formulae, and by 1992 mine and my families life had completely turned around, this included a wonderful wife and two more children and a list of goals I had made in 1986 after father passed away, became a reality. I had arrived finally, or so I thought, and was ready to respond to the question that still continued to bother me after all those years. What Does RICH Mean To You? I had some answers! That’s what I believed anyway! 1 - " A consistent income created from hard work 2 - " A healthy family 3 - " A loving wife and loving children 4 - "A nice car 5 - " A great holidays There are other things, but they are either directly or indirectly related to the above list. Even now when I look at that list it seems to have “hit the nail on the head”. Then within three years it all slowly began to fall apart, business wise, thankfully not family wise our “Polynesian Inheritance” is so strong, family always come first! Where was I going wrong? What was I doing wrong? Whose fault was it? Why now when we seemed so successful? A myriad of questions passed through my mind, I began to blame myself, I was making wrong decisions. I had begun a downward slide a personal one that took away my mental fortitude, my belief, my self-confidence, I lost motivation, the thing that really hurts me when I think back is that, “I didn’t really care anymore” I began to think that the world owed me, I was a good person so for that I should be rewarded. What a “Pity party”, darn pitiful is all I can say now! After all these years I am finally getting back on track! I realise that age and the new generation means I can never be what I was back then, why? Well that’s the past and I now live for today! Not tomorrow! I have found a “Certain Way” that has been available to each and every one of us for more than ninety years. Probably what W Clement Stone and Napoleon Hill and thousands of others used to become rich, but forgot to tell us some very vital points, whether they did it consciously or just took it for granted that we would figure it out, I am really not to sure. Want to find out as I have??? The real meaning of what “RICH” is, go to my website “Right Now” and find out how you to can have a “RICH” balanced and fulfilled life with “Prosperous Equilibrium”. PS. Get a “FREE COPY” about this “Certain Way”, with THE SCIENCE OF GETTING RICH

Manage Debtors And Creditors To Improve Liquidity

by: Terry Cartwright

Sales turnover and net profits may follow a rollercoaster pattern familiar to most business but when the cash flow dries up the game is over. Urgent attention to the management of working capital can provide every business with the cash resources to exploit its potential Most businesses will experience periods of lower sales and times when losses may be incurred as expenses exceed sales income. The situation is recoverable by producing higher sales and reducing costs and expenses. A business that runs out of cash resources is dead in the water. Debtors and sales income management The objective is to obtain payment from customers as fast as possible improving cash flow and minimising the risk of bad debts and not being paid at all. Payment terms offered to customers should be clearly stated and fixed as standard accounting figures according to the amount of funding the business is prepared to offer its clients. Because that is exactly what credit terms to customers is, free cash funding in exchange for eventual sales income. Consideration should be given to using a cash discount system to encourage sales invoices to be paid faster. In some businesses it would be appropriate to obtain up front deposits and scheduled payments. Review this practise to obtain a greater proportion of payments faster to improve liquidity. New customers should be subjected to a strict credit check. All new customers where credit check details are not available should be invoiced by the accounting function on a pro forma basis. Any businesses who fail to meet the highest credit score required should remain on a pro forma invoice basis. The credit control function needs consideration from the first step of issuing customers with a sales invoice, producing customer statements of the debt owed and a set procedure of credit control letters and telephone follow ups that actually achieve the end result of getting the cash in. An essential process in the credit control procedure would be to ensure the accountant or bookkeeper always issues sales invoices and customer statements promptly. Incorporate into the terms of trade a set of rules to invoke interest payments for late payment and late payment debt recovery costs. In the UK the Late Payment of Commercial Debts (Interest) Act 1998 sets out the statutory rights of business to claim interest and costs. Consider the possibility of factoring sales invoices due from debtors either by selling the sales invoices to a third party or raising cash on the value of those invoices pending payment. Factoring has the disadvantage of often not being cheap but does have the advantage of generating a regular stream of cash. Bad debts have a double impact on any business and all possible steps should be taken to reduce the risk. A bad debt not only uses valuable resources in chasing the debt with the negative impact on cash flow and liquidity but also is a straight loss to the net profit and a strong indicator that the accounting function is failing the business. Creditors and expenditure management The objective is to extend the time allowed for payment of expenses the business incurs. Consider the frequency of all payments made to suppliers. Small business have alternative payment terms available for the payment of taxes. In the UK value added tax can be paid quarterly or monthly, vat cash accounting can ease the tax liability due in critical periods and paye payments can be paid quarterly rather than monthly for smaller businesses. Every opportunity should be considered to improve liquidity and that would include the frequency which employee salaries and wages are paid. A sensitive area since it involves the most important people to the business success but adopting a payment period to coincide with the receipt of cash from customers may in some circumstances balance liquidity. General creditors are a major area to be addressed in terms of both the amount of credit received from suppliers and the time required to pay those creditor accounts. Larger orders on extended payments terms creates a risk area should the goods not be used but can greatly assist cash flow as the business is effectively borrowing free cash from its suppliers. Stock levels are crucial to financial management of the creditor total. High stock levels use valuable working capital which is offset in part by the level of creditors. Higher levels of stock financed by free credit from creditors lowers the cash flow requirements on the other parts of the business.

Who Really Needs To Be Working From Home?

by: Mathias Conner

Working from home is easy and anybody can be part of this. So who really is suitable and really needs this job? Housewives: Housewives generally have to attend to the whole house including the entire family. Hence, they do not really have the time to travel to their workplace to work a Nine-to-Five job. They need to have a flexible work time of their own. Therefore, working from home is their best choice if they want to earn an extra income for the household. Unemployed: The unemployed would also find this option suitable for them as they would not need to spend time searching everywhere for a job. They can consider this as a temporary option if they would rather work in an office. The unemployed are the best candidates for this job as they have all the time they need to complete the tasks given, hence, maximizing their profits. For people who are in need of a second job might consider working from home since the payout rate is quite good too. Just a few hours of your time and you might earn a couple of hundred dollars. Students: Students who are willing to sacrifice a few hours of their time to earn extra pocket money are also able to start working from home. As long as the tasks are completed on time, you will be paid for what you have completed. Retirees: For the retired who would like to find a job, this would be the best job you can find. Working from home need not need you to travel around or to your workplace. You can just sit back, relax and complete the tasks which you are given. This is definitely the best job for retirees. For others who are not specified in the above categories need not worry. This job opportunity is available to everyone. It depends on whether you really want this job.

How To Build a Profitable Business

by: Joanne Victoria

It’s never too soon to start saying thanks to your clients, vendors and referral sources for what they contribute to your business. Everyone loves to be appreciated and acknowledged, so start now and do something every month.
Keep in contact with your clients and vendors by sending articles you have written or that would be of interest to them. Add a little "How are you?" note to these people and keep the lines of communication open. Include current information about any new value-added products or services, such as a newsletter, or tele-class you will be presenting.
Marketing doesn’t have to be expensive. You just have to do it.
Communication and relationship are the keys to marketing. Attending numerous networking meetings may be worthwhile to some, but that strategy doesn't work for everyone because, as someone once told me, the people who love you will always refer business to you.
The people who are your advocates or supporters are the ones who require nurturing. Send them an e-mail, e-zine, note, or article at least once a month.
Gather your internal and external management teams in an informal meeting such as breakfast or lunch. Advise them of your upcoming plans, get feedback and give acknowledgement for all their support and advice.
Check in with former clients to see how they are doing. Don’t be afraid to dispense free information to these people. Generosity is its own reward. If you keep a timer on your desk, you can be sure of keeping the conversation brief as well as focused. Then, send them more information.Follow up in about two weeks to see how the seeds of your generosity have blossomed.
Information is available to everyone, through the internet, magazines and newspapers. Only you can provide customized data to your clients that will be appreciated as well as remembered.
Review your brochures, marketing letters, and newsletters in a new light. Does this information speak to your "Ideal Client"? Do you know who your "Ideal Client" is? Reinvent these documents as needed after you have thoroughly defined this client. Give these documents to your management team and get their feedback.
Does your collateral material speak to what you do? Is the information clear or does it require interpretation? Spend time on this now and review it every ninety days.
If the cost of a new brochure is prohibitive, or if you think your business will be adding more products or services in the near future, create an Information Letter.With this type of document, you can update your advocate group as well as former and potential clients. Again, it’s not costly and serves a specific purpose.
This letter can include updates on your particular industry or market. You also can advise them of your continuing education and how it will benefit them.
About those referral sources, they deserve a little extra attention. Remember, they thought of you first! Consider seasonal flowers, plants, a book or a special card.
You want them to keep remembering you! Nurture all these relationships and your business will grow and glow.

What Will You Accomplish When 52 Wealth Gurus Mentor You For Free?

by: Rick Miller

I recently interviewed my friend Tellman Knudson, an expert in helping people make rapid changes to overcome problems and achieve high levels of success using the latest human optimization technologies ... He's a Neuro-Linguistic Programming (NLP) expert and Certified Hypnotherapist who runs 5 clinics throughout the New England area.
Question: What is the key to rapid improvement?
According to Tellman, once you know the secrets to controlling your own brain (using such tools as NLP, relaxation techniques, and meditation) you'll be able to instantly make changes that will guide you to success.
Question: How can someone make rapid progress towards success in Internet marketing?
After Tellman expanded his practice by starting several successful websites, he became aware of some of the problems that new entrepreneurs face while trying to start their own business.
Many people have the necessary desire to become successful, but they often lack what he calls the 3 Core Factors of Success: focus, follow-through, and persistence that are required to rise above all obstacles.
He soon realized that the ultimate tool for helping millions become successful would have to take advantage of the underlying principle of NLP--the quickest way to success is to find a mentor (someone who is already successful) and model yourself after that person.
Question: How do I find a success mentor to help me?
According to Tellman, "In the past, to be able to persuade just one leading expert to act as your personal mentor could take years to make the right personal contacts."
Tellman wanted instant results, so he searched out 52 of the top experts in the world and persuaded them to act as mentors to members in his brand new program called the List Crusade.
Question: What is the List Crusade program and how does it work?
Each week for 26 weeks, List Crusade members get audio trainings from two top experts (each usually around 30 minutes long).
One audio interview lesson is always on a crucial self-help topic, everything from instant stress release to optimum brain performance and perfect physical health.
The other interview is always on Internet Wealth and shows anyone (complete beginner or experienced marketer alike) secrets of making money on the Internet by quickly building a huge opt-in subscriber list.
Question: Who are some of the experts doing the trainings?
Here are just a few:
Jay Abraham, Jack Canfield, Mark Victor Hansen, Brian Tracy, Shawn Casey, Stephen Pierce, Robert Allen, T. Harv Eker, Dr. Robert Anthony, Joe Vitale, Jack Zufelt, Marc Goldman, and many more ...
Question: How much does it cost to get access to all the List Crusade trainings?
Even though some of the experts (such as Jay Abraham) charge $5,000 or more for just one hour of consulting, Tellman says that each mentor in the program can scholarship in members at no cost from their own subscriber list. The scholarship is also available by special invitation.
He says, "The goal of the List Crusade mentor program is to provide over one million people with the knowledge and tools to be successful on the Internet and in life ..."
In my opinion, the bottom line is: This is one resource anybody who is serious about having a better life should take advantage of--especially if you want to see remarkable and immediate results ...whether you want a bigger bank account, better relationships, peace of mind, personal satisfaction, increased self-esteem, a successful business, a new car, or your dream home.
Copyright 2005 Rick Miller

Interview Like a Pro in Five Easy Steps

by: Linda Matias

It's an inescapable fact that interviews are the "make or break" factor on whether one lands the job. So it is surprising to find that most job seekers approach interviews with a cavalier attitude, without any preparation - they simply wake up the morning of the interview, cross their fingers, and hope for the best.
Unfortunately, walking into an interview cold rarely works. Human capital is the biggest expense an organization has. When all is said and done, a wrong hiring decision costs a company time and resources. Through a series of well thought out questions, a skillful interviewer will use the interview process to distinguish between those candidates who have experience and those who are experts in the given field.
An interview can be won or lost within seconds, and by implementing simple strategies, you can vastly improve your interview performance. Interviews can be challenging but they are manageable when approached as a five-step process.
1. A successful interview depends in part, on whether you understand your role and that of the interviewer. As an interviewee, you have two obligations - (1) to sell your qualifications and (2) to evaluate the position and leave the interview with a solid understanding of the job's requirements. Interviewing is more than just answering questions; it is about preparing, understanding and responding to the hiring organizations needs.
The role of the interviewer is to sell the company, assess your commitment to working for their organization and determine if you are the same person that is represented on paper.
In reality, your role and that of the interviewer overlap. Both of you are gathering information, selling a product and evaluating whether or not there is a match between you.
2. Before each interview select 3-5 accomplishments or skills that you consider to be your major selling points. Every time the interview shifts in a direction that doesn't support your agenda, figure out a way to steer the conversation back to your major selling points. When determining your selling points, consider situations where you demonstrated initiative, overcame challenges, and/or streamlined a process.
While it may be difficult to define the specific needs of every company that is hiring, all organizations are looking for an employer that has the following characteristics: advanced communication skills, teamwork skills, honesty and self-confidence. Whenever possible, integrate these qualities in your responses.
3. Build personal credibility by adapting your communication style to that of the interviewer. The way you communicate goes beyond the words that you choose. Your appearance, demeanor, posture and attitude all play a part in the way your message will be received.
Trust begins to form during the interview and by flexing your communication style you leave the listener with a subconscious message that says, "I can sit next to this person on a daily basis." Once you have accomplished that, you are one step closer to a job offer.
4. Turn the interview into a conversation by asking questions throughout the interview. Ask questions that reflect your interest in the organization. If you leave an interview without asking relevant questions, the interviewer will question your sincerity. By asking questions you show the interviewer your commitment to your profession and the industry.
5. Don't get blind-sided with questions that you should have been prepared to answer. There are several questions that are interviewers canned favorites and they include: Tell me about yourself, Where do you see yourself in five years? Tell me about a time when you successfully handled a situation?, and What do you consider your major achievement?
Rehearse interview answers, but don't sound rehearsed. Practice your responses until you feel that they clearly reflect your skills and personality. Don't just make statements that you think the interviewer wants to hear.
Going in unprepared is a sure-fire way to sabotage an interview. When it comes down to the wire and it is between you and another candidate with a similar background, interview performance will probably be the deciding factor on who gets hired.
Job offers are not won by accident; time spent preparing for an interview produces significant results. The more you practice your interviewing skills the more confidence you will gain and the more polished your presentation.

ETFs, Funds And Shares: What Are They And What Are Their Benefits?

by: John McElborough

Exchange Traded Funds, better known by many investors as iShares, the brand owned by Barclays Global Investors ('BGI') have been around in the UK since April 2000, with the launch of the iFTSE100 on the London Stock Exchange. From a slow start, by the end of 2005 (the latest figures available), some 125 billion was held in assets under management. Generally, when you look for your share price information, you'll find them grouped in the extra MARK section, where you'll now find some 45 different ETFs on offer. Although they have been around for sometime, let's just remind ourselves how ETFs work. They are listed on the stock exchange, providing the flexibility and trade ability of a share, including the fact that the price is continuously quoted, but that one share can provide instant exposure to an entire Index, giving you the diversification benefits of a fund. ETFs are also a flexible way of achieving cost-effective market exposure. Because the funds are registered in Ireland, there is no stamp duty to be paid on purchases. Management costs are taken from dividends that are accrued by the fund, and any excess income is then distributed to shareholders: unlike unit trusts, there are no initial fees to pay on the original purchase. The price of the fund is always close to the 'Net Asset Value' (NAV) of the underlying investments and will usually have tight spreads, unlike some unit trusts and some investment trusts. Also ETFs will disclose their holdings everyday, whereas traditional funds usually disclose their holdings twice a year. What can I invest in? ETFs offer a wide range of opportunities for investment with varying levels of risk: as at mid-December there were 45 different markets/indices to invest in, ranging from corporate bonds to the Taiwanese market. Starting at the lower end of the risk spectrum there are several corporate bond ETFs, as well as some Gilt-based investments. Moving on to the medium risk level, you can choose from global funds to ones that are more specific to individual regions, such as the US or Asia. There's also the option of investing in individual indices: 'index trackers' are available for the UK's FTSE100 and 250 Indexes, the US S&P 500, or Europe's Euro first 100 & 80, spanning the top European companies. For those wanting a higher level of risk, there are also ETFs which will give you exposure to emerging markets, such as Turkey, Korea, Taiwan and Eastern Europe. ETFs don't offer the same wide variety as unit trusts, but for investing in the countries and sectors they do cover, their charging structure and trade ability make up for this. As such, they provide a good, low cost, easily-traded route into the market, with the flexibility to move up the risk ladder as your experience and capital grows. Finally, if you've an appetite for an even spicier approach, the London Stock Exchange also enables you to invest in commodities, through ETCs (Exchange Traded Commodities). Although like ETFs they are traded in the same way as shares, and are eligible to be held in a PEP or ISA, they do work in a completely different way. Whereas ETFs actually buy the underlying investments, ETC managers don't buy and store tons of wheat and copper, stack-up barrels of oil, or herd livestock into pens. Rather, they buy options on these commodities. As a result, ETCs are classed as more 'complex' investments by the FSA and you'll need to complete a special 'risk notice' confirming you understand the additional risks of investing in them. So take a fresh look at ETFs - you might just find they offer you more than you thought! Funds: take your pick of the best Unit Trusts and Open Ended Investment Companies (OEICs) are investments that let you pool your money with lots of other 'retail' investors. This money is invested on your behalf by a wide range of specialist fund managers, investing in, for example, Government gilts and bonds, commercial property and equities. Investing in funds gives you access to a highly-diversified range of investments at a reasonable cost. You will also have easy access to asset classes and international markets that would otherwise be difficult and expensive to invest in and benefit from the Fund Manager's contacts, knowledge, experience and expertise. Funds come in many shapes and sizes from 'trackers' to specialist or 'themed' funds. An index-tracking fund (often referred to as a 'passively managed fund') aims to match or 'track' the performance of a given market index, such as the FTSE All Share or the FTSE 100. They do this using computer programs to work out how much of each individual company they need to buy and sell to mimic the performance of the Index as a whole. But not all 'tracker funds' match the Index they are tracking that well - so be sure to check their record. An 'actively managed fund' on the other hand employs researchers to study and engage with companies in which they plan to invest, and to keep abreast of the prospects for companies in which they already invest. They'll compare their performance to a 'benchmark' index related to the investment objectives of their fund, with the expectation that the extra work they put into tracking down the 'best' investments will literally pay dividends through higher growth than that of their benchmark. Choosing your funds When you pick your funds, be sure to rate them against other funds that fish in the same waters. Don't expect a 'value' fund and a 'growth' fund to have similar track records. Only by comparing funds with their true peers will you make a good choice. Whilst past performance should not be seen as an indication of future performance, past performance does matter when comparing like with like. Chasing winners however, is as dangerous as day-trading. Not surprisingly, all five of the top-performing funds at the end of 1999 were technology sector funds. Sector funds have a place in many a portfolio, but for the majority of investors they belong at its edges, not at its heart. An individual fund will give you a wider spread of underlying investments: by investing across a number of funds you're better able to smooth out the ups and downs of the market overall. But that won't work if it turns out that your funds hold virtually the same investments. So have a look at each fund report to see their top holdings and make sure you've got a good spread overall. Individual Company shares When it comes to the individual shares part of the investment model, the lowest risk entry point has always been recognised as companies in the FTSE 100. However, you should always bear in mind that the Index evolves over a period of time, changing its overall make-up. Consider, for example, that over the last 6 years technology shares have fallen out of the Index, while mining companies, on the back of booming commodity prices, have dramatically increased their presence. Yet, because of the volatility and cyclical nature of the sector, individual mining groups can't be classed as low risk. Other 'big names' have gone from the Index due to take-over activity - companies like P&O, Abbey National & BAA - all of which have to be replaced. Today, some 80% of the make-up of the overall value of the FTSE100 comes from just 5 sectors - Banking, Mining, Oil & Gas, Pharmaceuticals, and Telecoms (fixed and mobile). So, if you're looking to the Footsie to form the bedrock of your investment in individual shares, where should you start? Companies involved in essential, everyday products and services, such as the water and electricity utilities and broad-based retailers often provide a solid backbone to any share portfolio. You could argue, however, that the classic 'defensive' nature of utilities has recently been undermined by the number of take-overs within the sector. The share prices of the remaining companies have climbed to all-time highs, potentially increasing the level of risk. There is without doubt an appetite for the assured cash flow that utilities provide, and it's fair to say that a growing number of analysts agree it's hard to justify the current prices. Despite this, get your timing right, buying at the right price, and these sectors should still provide a strong base on which to build your individual holdings. To extend your scope, whilst still staying within a lower risk profile, your next ports of call should be into the banks, pharmaceuticals, tobacco and beverages sectors. Move on up to the intermediate, 'medium risk' level, and you've an increasing choice, including the remaining FTSE100 companies, dominated by the mining sector. The majority of shares in the FTSE250 would also fit into this 'medium risk' category. Still relatively large companies, it is these shares that have seen some of the biggest gains over the last 3 years, helping push the 250 Index to record levels in 2006. One noticeable difference between the FTSE250 compared to the FTSE100, is that companies here generally have less international exposure. When it comes to the consideration of risk, you can play this one of two ways: some argue that having the majority of profits coming from the UK provides for less risk, while others (including us) favour having fingers in as many regions as possible. Finally, at the higher end of the risk scale you find smaller companies and AIM quoted shares. These tend to be more volatile and less liquid than their larger cousins, factors that generally lead to wider bid/offer spreads. The AIM market has seen considerable growth over the last 10 years, partly because companies don't have to comply with the same stringent requirements of the main market. Often, private investors don't get a look-in as part of the flotation, having to wait until the shares start trading, so do pick your time and use stop-loss limits - that early flush of success isn't always carried through. One of the fastest growing sub-sectors within AIM is small mining and exploration groups, many of which are based abroad but have chosen to list in the UK. Because their prospects include a significant amount of 'hope' value, such companies will represent the very highest level of risk. Equally classified as higher-risk, though as a result of different factors, are shares in overseas companies. Household names like Volvo, Coca Cola and Johnson & Johnson are big names and big companies. The additional risk they bring for investors comes from the fact that the majority of their earnings are from overseas. So you face the added risk of changes in exchange rates. Over recent months, for example, the fall in the US$ would have had a big impact on the sterling value of dividends from US shares And when the companies you invest in are smaller ones, it's often harder to find reliable research and analysis, harder to track and compare performance, and harder to follow the news that affects the share price. True, most big UK names also trade globally, but as 'home market' companies they are well-researched, much commented upon and regularly feature in the UK business finance pages. That's not to say you shouldn't venture outside these shores - far from it - but you need to do so with your eyes open. That's why we see overseas shares as being more appropriate for investors asthey move up the experience ladder and once they've built a balanced portfolio. And it's also why, in general, we'd advise investing in market trackers and funds before moving into individual overseas shares.

Superior Leader - Warren Buffet

by: Michael J. Spindler

Superior business leader and American investor Warren Buffett is often called “Oracle of Omaha” or the “Sage of Omaha” and philanthropist. (Wikipedia, 2007) Buffett is the CEO, and the biggest shareholder of the Berkshire Hathaway Company. Buffett’s has an estimated current net worth of approximately $52 billion in US funds. Forbes Magazine ranks Buffett the third richest person in the world in September 2007 behind Carlos Slim and Bill Gates. Warren Buffett is known for his economical and plain lifestyle. Buffett still lives in the same Omaha, Nebraska house that he purchased in 1958 for $31,500 with a current value of $700,000. In 1989, Buffett spent $9.7 million of the Berkshire’s funds on a corporate jet. He jokingly named it “The Indefensible” because of his past criticisms of such purchases by other CEOs. (Wikipedia, 2007) Warren Buffett decided to make a commitment to give his fortune to charity back in June 2006. Buffett’s charity donation is approximately $30 billion, which is the largest donation in the history of the United States. The donation was enough to more than double the size of the foundation with 83% of it going to the Bill and Melinda Gates Foundation. Buffett believed that his family had enough money to get started in life so Buffett decided to give his fortune to charity. Buffett’s annual salary in 2006 was only $100,000. In 2007, Buffett was listed among Time Magazine’s 100 Most Influential People in the World. (Wikipedia, 2007) What makes Warren Buffett a good business leader? This is what everyone wants to know because Warren buffet is so successful. It all starts with leadership. Warren buffet is a true leader where his leadership makes a difference in the world. Leadership is very much related to change and Warren Buffett has the capabilities of leadership change to fit the changing world. Warren Buffett has repeatedly demonstrated the ability to map read in the irregular waters of change. Is Warren Buffett born a leader? The authors of this paper believe not. Experience and research has shown little evidence that an individual who comes to power is a “born leader.” Warren Buffett took the falls that any other leader has to take. Warren Buffett learned from his mistakes and turned his mistakes into a positive thing. Warren Buffett shares his leadership at all organizational levels and Buffett is empowered to share leadership responsibilities. In the world of business, many titles related to leadership roles are actively used in business and Warren Buffett wears those titles to make him effective in multiple leadership positions in business. Distinction between good leadership and good management is made often. Managers are made to be organizational, controllers and budgeters. Warren Buffett has leadership in all three departments and one must have these traits to be a good business leader. Another important trait in Today’s business leadership is communication. Warren Buffet is a skilled communicator in all aspects of life. Communication is the real key of leadership. Skilled communicators have an appreciation for positioning in the business world. Warren Buffet is experienced at positioning himself at the right place at the right time. Warren Buffet has the understanding of the people he is trying to reach and what he can and cannot hear from the people. Knowledge of audiences’ needs and wants gives the orator the ability to listen. Warren Buffett is an excellent listener with the ability to convey his understanding. When Warren Buffett talks, people listen. Warren Buffett can send a message through an open door and does not have to push the message through a wall. Leadership is crucial to any successful business and good leadership is what Warren Buffett is all about. This is what makes Warren buffet a good business leader. Mr. Warren Buffett’s investment strategies and course of leadership are shining examples of characteristics shared by cognitive theorists. Cognitive theory is an approach of explaining behavior through perception, anticipation, and thinking. Mr. Buffett’s continual approach of analyzing both possible investment choices, market trends, and the ability to place management resources of the right caliber in the right position has consistently brought this investor to the forefront amongst peers and the marketplace. At the core of every sound investor is a creative innovator. Innovation demands creativity. Creativity in turn draws on our cognitive faculties, across the full amplitude from emotion to reason. In the number-heavy world of global investing, innovative thinking is critical. Innovative investors decipher future trends, spot likely winners by combining science (financials) with art (acuity and perception) and continuously mitigate risk. They assess user needs, product features, the proper deployment of money, professional organizational structures and risk management. (Kore Kalibre, 2006) Mr. Buffett’s instinct and ability to interpret market trends is also held by tight reigns. Despite over 50 years of growth, Mr. Buffett always adheres to one of the most basic business principles: “…only compete where you have a competitive advantage. Warren Buffett refers to staying within your circle of competence. Social psychologists tell us, though, that we are prone to overconfidence when it comes to assessing our abilities…” (Arthridge, 2006) A man of Warren Buffett’s position and track record could easily be derailed to a sense of over confidence. The principle of only competing within your range of competitive advantage is a principle that can be applied to many other areas in life, and Mr. Buffett’s ability to work and live by this idea has allowed him to continue forward with minimal bruising. By establishing the previous examples, the authors can reinforce the principles of cognitive theory in that Mr. Buffett behavior patterns are clearly dictated by thought processes, which include interpretation, analysis, and foresight. “As experiences and events gain meaning and value, the process becomes increasingly top down as the mind in (a) attempt at an orderly process influences perception though beliefs, goals and external process” (Gardener, 2007) Warren Buffett’s is a self empowered leader, because he is loyal, sets goals, plans a strategy for achievement, and stays committed until he accomplishes his purpose. Up to date, he is the greatest stockbroker of all-time. He is a very conservative investor that prefers to invest in companies that sell name brand products that he uses. For example, Coca-Cola, Gillette Razors, See’s Candy, Gulfstream Jet, and GEICO are the major companies he invested in. In the nineties his assets quadrupled in less than five years. He is a smart investor that usually does not take big investment risks. For example, he will not invest in internet stock, because the return is unpredictable. He likes to invest in companies that he is sure will be successful 20 years later. He buys the company with the intentions of keeping it forever. Usually, the management team of each company is the same staff that sold it Warren Buffett from the beginning. He stays loyal to his partners, and the team workstheir best to keep him happy. After Warren Buffett’s wife died, he decided to donate 85% of his money to charity. However, “he wants his money to be used the same year he donates it”.(Harris, 2006) The requirement will accelerate the process to help the world. According to Fortune magazine, five-sixths of his money will go to the Bill and Melinda Gates Foundation. This foundation which focus on finding cures for diseases that are common in poor nations. The rest of the money will be split among four other charities, that are each run by his three children and one that is in his late wife’s name. Warren Buffett is not a huge spender. In fact, he still lives in the same house he bought 40 years ago. Warren “told ABC News “Nightline” that being born into wealth did not entitle his children”(Harris, 2006). In addition, he told Fortune magazine that, “A very rich person would leave his kids enough to do anything, but not enough to do nothing.”(Harris, 2006) In other words, he wants his children to work earn their money and value hard work and smart choices. In the year 2006, Warren’s first annual donation to the Bill and Melinda Gates Foundation was $1.5 billion and the rest was divided among the four charities. He was the first person to make a donation better than Bill Gates, the richest man in the world. It seems as if Bill Gates and Warren Buffett set a good example and lead others to be more generous, because now the Barron Hilton has committed to donating half of his fortune to charity also. Barron Hilton is the founder of the Hilton Hotels and is worth $2.3 billion. Hopefully, a trend started among the fortunate to give to the less fortunate. The personality of Warren Buffett ties to the Social Cognitive Level, because he tries to understand and make sense of other people. He observes the differences in social knowledge when dealing with people. Social cognition refers to making sense of ourselves, others, and how the information is used. In the sixties and seventies Albert Bandura and Walter Mischel were psychologists, studying personality development. They found that social learning and cognitive principles improve ones abilities to self-regulate and to follow goals. Warren investment choices were successful, because he conditioned his the way he processed information, choices, and expectations. References - DO Not Strip References! Gardener, J. (2007). Cognitive Behavior Theory. Retrieved December 26, 2007, from http://www.cognitivebehavior.com/theory/index.html Harris, D. (2006, June 26,). Warren Buffett's Unprecedented Generosity. Retrieved December 31, 2007, from http://abcnews.go.com/print?id=2118501 Kore Kalibre (2006, March-April 2006). Warren Buffett’s Innovation: Staying away from Rapid Product Innovation. Retrieved December 26, 2007, from http://www.korekalibre.com/index.php?option=com_magazine&task=show_magazine_article&magazine_id=26 Legg Mason Value Trust (2006, October 26). Legg Mason Value Trust (LMVTX) Letter to Shareholders. Retrieved December 26, 2007, from http://markets.kiplinger.com/kiplinger?GUID=323448&Page=MediaViewer&Ticker=LMVTX Wikipedia (2007, December 25). Warren Buffett. Retrieved December 18, 2007, from http://en.wikipedia.org/wiki/Warren_Buffett

Understanding the Mortgage Meltdown; What happened and Who's to Blame

by: Richard Gandon

People are losing their homes and many more will lose their jobs before the mortgage meltdown works its way through the system. To paraphrase Alan Greenspan's remarks on March 17th, 2008, “The current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the Second World War. The crisis will leave many casualties.” How many casualties? Experts are predicting that in the next few years, between 15 and 20 million homeowners could have homes worth less than what they owe. Walking away from a bad situation may actually make sense for people who mortgages that are 'upside down' considering the fact that refinancing is out of the question and home equity is nonexistent. It seems quite easy to point fingers at greedy Wall Street titans for causing the sub-prime mortgage crises. They after all, put together the deals that allowed banks to underwrite mortgages and then offload these liabilities to investors. What many fail to realize is that there is no shortage of blame to go around from homeowners buying more home than they could afford to real estate agents looking for more commission dollars. Mortgage brokers and bankers, the banks themselves, ratings agencies such as Moody's and Standard & Poor's, Wall Street, the Fed and last but certainly not least, the Federal Government. Let's start with the homeowners--the people who are now in the process or soon to enter the process, of losing their homes. Some of these people had never before owned a home and as such, may not have been prepared for the costs associated with homeownership. Basic financial literacy is sorely lacking in this country despite there being no shortage of budgeting and tracking programs readily available such as Quicken and Microsoft Money. The lack of financial literacy does not absolve these buyers of their responsibility.
Every borrower receives a truth in lending disclosure statement. Here is a portion of what the act covers: The purpose of TILA (Truth In Lending Act) is to promote the informed use of consumer credit by requiring disclosures about its terms and cost. TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's principal dwelling, regulates certain credit card practices, and provides a means for fair and timely resolution of credit billing disputes. With the exception of certain high-cost mortgage loans, TILA does not regulate the charges that may be imposed for consumer credit. Rather, it requires a maximum interest rate to be stated in variable-rate contracts secured by the consumer's dwelling. It also imposes limitations on home equity plans that are subject to the requirements of Sec. 226.5b and mortgages that are subject to the requirements of Sec. 226.32. The regulation prohibits certain acts or practices in connection with credit secured by a consumer's principal dwelling. Much of the subprime mortgage crisis can be traced directly back to variable-rate mortgages. As is clearly stated above, “TILA does not regulate the charge that may be imposed for consumer credit. Rather, it requires a maximum interest rate to be stated in variable-rate contracts secured by the consumers dwelling.” It also clearly states that TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's principal dwelling. One has to wonder whether or not these homeowners: 1. Bothered to read the truth in lending act disclosure at all. 2. Understood what the truth in lending act disclosure meant. 3. Chose to ignore the information printed clearly the truth in lending act disclosure. A number of months ago, just as the subprime mortgage crisis was beginning to unfold, The New York Daily News ran an article about a family in New York City, who had bought a home and were now faced with the prospect of foreclosure. The article was sympathetic to this family, highlighting the fact that they're living the American dream and that this dream was about to come to an end. What I found to be distressing was the fact that clearly visible in the photo that accompanied this sympathetic article was a very expensive flat screen television hanging on the wall. Perhaps I'm naïve, but I can assure you that if I were faced with the prospect of losing my home and having my family put out on the street, there is absolutely no way that I would still have that expensive television hanging on my wall. It would have been one of the first things to be sold and some financial relief would be found by jettisoning what I'm sure was the expensive cable bill. Clearly the public needs easy access to financial literacy courses. Too bad we don't see the need to make this a mandatory course of study in our educational system. Mortgage bankers and brokers have in the last four or five years been raking in cash by the bucket load in the form of commissions paid when mortgages they've originated, close. Many of these people have not needed to do much in the way of prospecting. Instead, their phones have run off the hook as people have jumped on the homeownership and refinancing and take out extra cash bandwagon, despite their ability to pay for their home. No-document loans were readily available without the borrower having to produce documentation that backed up their income. Clearly this practice can and indeed has, lead to substandard loan underwriting processes. Were some of these mortgage bankers and brokers dishonest? Sure. Were all of them dishonest? I think not. To have a massive nationwide conspiracy, where thousands and thousands of people involved in the mortgage banking and mortgage brokering profession got together to create this situation is simply not feasible. Yes, some of the blame does belong with those in the mortgage industry, but they were simply a small cog in the huge machine that created this mess. Let's discuss real estate agents. In 2007, we bought a home, and also sold a home. The agent we used to purchase our home was absolutely fantastic. In our opinion, she went above and beyond to make our deal happen. She answered every phone call, followed up on every concern and was the epitome of professionalism. We consider this individual to be a friend, and we have sent referrals her way that have resulted in her earning additional commissions. We will continue to recommend her to all who ask or mention that they'd like to buy or sell a home in our area. The real estate agent, we used to sell our home, could not have been more different. We got our old home ready to sell prior to closing on our new home. We decided to list it as “For Sale by Owner.” In the event that we didn't sell this home on our own, it was our intention to list it with an agent as soon as we had closed on the purchase our new home. Literally, from the day we put the sign in front of our home and listed it on a “For Sale by Owner” website we were inundated with phone calls from real estate agents. We were told many lies and were constantly harassed; although we had already made it quite clear to every agent who called, and there were more to 60 who did; that we were willing to pay half the commission-the same as they would have received had they sold another agent's listing. We also told every agent that called that we had already lined up an agent to sell our home in the event that we chose to no longer sell it ourselves. Our deadline was the closing date of our new home purchase. We did have an interested buyer who shortly after our closing date decided to keep looking so we listed our home with a local agent so that we could concentrate on getting our new home ready for our moving date at the end of the school year. This agent showed our home a maximum of two times and got an offer which we accepted. We ended up getting $1,000 less than we had wanted in a declining Real Estate market. The agents who had called many times to harass us called our listing agent on a number of occasions and he lied telling them that the house was under contract when in fact it wasn't at that time-clearly a breach of our agent's fiduciary duty. Quite frankly an ethical agent would have continued to show our home until closing in the event that the deal fell through. But wait, there's more. Our agent also acted as the buyer's mortgage broker. At the closing table, we learned that he had signed documents from the buyer stating that he (our agent) represented them and we had signed documents stating that he represented us. We also learned that the buyer had effectively put down approximately 2-3% of the purchase price when financed closing costs were factored into the equation. Their first mortgage had what we thought was a high fixed rate and their second mortgage came with a rate in excess of 8.5%. Because the closing happened in August, literally in the midst of the first wave of the meltdown, if they didn't close on the day they did (August 31st, 2007), Citibank wasn't going to extend their rate. When my wife & I have bought houses in the past, it had always been a very happy day. These people looked absolutely shell-shocked at the closing table. I'm not convinced that they knew just how much their monthly payment was going to be until closing day. We knew down to the penny well in advance having budgeted and planned everything on a spreadsheet. Were these people stupid or just inexperienced and mislead by a greedy combination of real estate agent & mortgage broker? I'm extremely confident that they are intelligent people but inexperienced and taken advantage of by an unscrupulous agent. The banks are also culpable. Prior to bank deregulation, Savings and Loans provided mortgages to home buyers and kept these loans on their books. Non-performing loans had a negative effect on the S&L's profitability which of course caused tighter lending guidelines such as job stability and decent down payments in order for prospective home buyers to be approved for a mortgage. Way back then, a home buyer had to actually save up enough money for a down payment 10 or even 20% before a bank would ever consider underwriting a mortgage. The checks & balances kept banks solvent and borrowers responsible. Although this approach worked, some cried foul stating that the regulated system was racist and discriminatory-and there certainly was some truth to this. Skipping forward to the present, banks made a bundle on mortgages over the past five or six years. For the most part, they allowed their underwriting criteria to be stretched so far out of alignment that almost anyone could and indeed did, qualify for a mortgage despite their ability to pay. Some folks even applied for and received mortgages for more than the property was worth. Sometimes for as much as 25% more than their property was worth! Under the prior system, 125% mortgages would not have been possible because of course these loans were held on the banks' books and could have led to losses that would have had to have been absorbed directly by the bank. So what went wrong? Under the current system, these loans were sold to the big Wall Street investment firms who repackaged them as collateralized mortgage obligations (CMO's), Mortgage Backed Securities (MBS's) and other similar acronyms. These instruments were then sent to the ratings agencies for their blessing and more importantly a letter rating. Many of these structured finance deals receive AAA ratings-the highest ratings available meaning that in theory, these instruments were least likely to default. How does one create a 'triple A' or AAA rated financial instrument out of sub-prime mortgages? Herein lies the magic. These Asset Backed Securities (ABS) are made up of different tranches or slices, each carrying a different risk and reward level. The first dollar of principle and interest is applied to the securities with the highest rating, and the first dollar of loss is applied to the tranche with the lowest ratings. The lower slices are designed to provide a security blanket that in theory protects the higher-rated securities. The investment banks that package or 'structure' these securities in order to earn fat fees when they sell them to investors are the same entities that pay the ratings agencies to rate these instruments. Clearly the possibility for conflict of interest is present. If investors and not the investment banks that stand to rake in millions in fees were to pay for the rating, the potential for this conflict of interest would be negated. Furthermore, the investment banks have a vested interest in convincing the ratings agencies of the credit worthiness of these securities. So we've already pointed fingers at homeowners, some greedy, many more I suspect, naïve or uninformed, real estate agents-one out of more than 60 in my experience was a gem, mortgage brokers & bankers, banks, Wall Street and ratings agencies so who's left? The Federal Reserve and the Government of course. The Fed as its known is responsible of the country's monetary policy and for supervision and regulation of banks. This is the definition of the Fed's roles in their own words: Monetary Policy The Fed is best known for its role in making and carrying out the country's monetary policy-that is, for influencing money and credit conditions in the economy in order to promote the goals of high employment, sustainable growth, and stable prices. The long-term goal of the Fed's monetary policy is to ensure that money and credit grow sufficiently to encourage non-inflationary economic expansion. The Fed cannot guarantee that our economy will grow at a healthy pace, or that everyone will have a job. The attainment of these goals depends on the decisions of millions of people around the country. Decisions regarding how much to spend and how much to save, how much to invest in acquiring skills and education, how much to spend on new plant and equipment, or how many hours a week to work may be some of them. What the Fed can do, is create an environment that is conducive to healthy economic growth. It does so by pursuing a goal of price stability-that is, by trying to prevent inflation from becoming a problem. Inflation is defined as a sustained increase in prices over a period of time. A stable level of prices is most conducive to maximum sustained output and employment. Also, stable prices encourage saving and, indirectly, capital formation because it prevents the erosion of asset values by unanticipated inflation. Inflation causes many distortions in the market. Inflation: · hurts people with fixed income-when prices rise consumers cannot buy as much as they could previously · discourages savings · reduces economic growth because the economy needs a certain level of savings to finance investments that boost economic growth · makes it harder for businesses to plan-it is difficult to decide how much to produce, because businesses can't predict the demand for their product at the higher prices they will have to charge in order to cover their costs Bank Regulation & Supervision The Fed is one of the several Government agencies that share responsibility for ensuring the safety and soundness of our banking system. The Fed has primary responsibility for supervising bank holding companies, financial holding companies, state-chartered banks that are members of the Federal Reserve System, and the Edge Act and agreement corporations, through which U.S. banking organizations operate abroad. The Fed and other agencies share the responsibility of overseeing the operation of foreign banking organizations in the United States. To insure that the banking system remains competitive and operates in the public interest, the Fed considers applications by banks for mergers or to open new branches. The passage of the Gramm-Leach-Bliley (GLB) Act in November 1999, was the culmination of a multi-decade effort to eliminate many of the restrictions on the activities of banking organizations. Some of the main provisions of the GLB are: · Repeals the existing limitations on the ability of banks to affiliate with securities and insurance firms · Creates a new organizational form that allows banking organizations to carry new powers. This new entity called a "financial holding company," (FHC) and its non-banking subsidiaries are allowed to engage in financial activities such as insurance and securities underwriting The Fed's enlarged role as an umbrella supervisor of FHCs is similar to its role in supervising bank holding companies. The Federal Reserve Banks will supervise and regulate the FHCs while each affiliate is still overseen by its traditional functional regulator. The Fed has to delineate the financial relationship between a bank and other FHC affiliates. Its primary goal is to establish barriers protecting depository institutions from the problems of a failing affiliate. To do this efficiently the Fed has to ensure increased communication, cooperation, and coordination with the many supervisors of the more diversified FHCs. The Fed has access to data on risks across the entire organization, as well as information on the firm's management of those risks. Regulators will be in a position to evaluate and presumably act on risks that threaten the safety and soundness of the insured banks. It would appear that the Fed has failed to curb housing inflation which played a role in this entire debacle then made matters worse and in their efforts or lack there of, to properly supervise banking institutions. Finally the government, a.k.a. Uncle Sam, the big Kahuna 10,000 pound elephant etc. Where do we begin? How about with: 'Where were they?' It now appears that after millions of horses are out of the barn (some horses ran, others were foreclosed upon) the government wants to step in with a bailout to save the rest. While nobody wants to see people lose their homes, the question that must be raised is this: What about all those of us who were responsible? Those of us, who scrimped and saved up a decent down payment, bought less-house than we could afford and who live below our means? Many of us drive older cars and keep them longer. We don't run out and buy the latest and greatest at inflated prices, we watch, wait and budget. When the World Trade Center was attacked, families who decided not to sue received government payouts and we certainly don't begrudge them as I'm sure that given the choice, they'd prefer to still have their loved-ones over the money. The problem, in typical government fashion is that those who were responsible and had insurance policies in place received less than those who were irresponsible and didn't plan ahead. I'm not talking about dishwashers at Windows on the World and blue collar workers; I'm talking about executives, traders and people who should have known better. Now our government, the same government that sat by idly watching as this bubble got bigger and bigger despite many warnings, wants to step in and bailout people who are in danger of losing their homes. There has been no talk about educating people, let's not teach people to fish, rather, let's give them a fish and bail them out once again at the expense of those who are responsible. Clearly, by keeping the majority of the population financially ignorant, there is a lot of money to be made by the poverty industry.