Financial News

October 31, 2009

Outsourcing Alternatives to a Politically and Economically Unstable India

Filed under: Finance — Tags: , , , , , — admin @ 1:25 pm

Outsourcing: A love / hate relationship for U.S. I.T. professionals. ?Ask the average employee in any I.T. organization, and hearing about fear of jobs going to India and China is almost unavoidable. ?Although many have started the move toward business service management (BSM) to address the chaotic labor trends, I.T. labor itself still consumes over one-third of I.T. budgets. ?This figure is perfectly in line with a recently published Gartner report stating that 37% of the typical I.T. budget goes directly to personnel costs. ?What are you as the CIO going to do to manage this frenzied situation? ?Is outsourcing, or ?offshoring,? the answer? ?

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How can you outsource your operations to a foreign country and still maintain compliance with best practice frameworks such as ITIL or MOF? ?How do you maintain Sarbanes-Oxley, PCI, or HIPAA compliance when utilizing 100% offshore resources with far less control? ?

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Almost everyone in the I.T. sector has at least one story about various operational tasks being ?offshored? to India, and no call-center, network operations center (NOC), or infrastructure team has been immune to rumors of jobs going offshore. ?No longer are the cities of Mumbai and Delhi simple manufacturing hubs and suppliers of raw materials. ?The country is home to some of the largest corporate call centers and development centers in the world. ?In late 2005, the Indian outsourcing workforce numbered 350,000 individuals. ?That total is now estimated at well over 800,000, with many new positions going unfilled due to the lack of qualified candidates.

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Eleven years ago this month, USA Today published an article titled ?Can political instability be eliminated in India?? ?Looking solely at the news of the past six months, the answer to that question is an obvious NO.

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The trend toward a twenty-first century India has not fostered the sort of sweeping political change one might expect from the world?s most populous democracy. ?Moreover, the unwillingness of the Indian government to more robustly combat intellectual property theft is the stuff that causes your legal team to lose MANY nights of sleep.

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Recession has made its way to India as well. ?The 4 December 2008 issue of The New York Times ran an article discussing the wave of outsourcing firms scaling back their daily operations in India due to the unhealthy global financial climate. ?As of this week, the Indian rupee is at a record low.

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India makes a strong case as the ?global back office,? yet it has failed to produce an environment supporting front-office operations such as product innovation and corporate strategies. ?The prevailing thought of the past 5 years has been that Indian outsourcing firms are masterful in the art of efficiency and product development measures. ?What about now?

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On 7 January 2009, Indian stocks took a nosedive in the wake of announcements by Satyam Computer Services that corporate profit summaries had been inflated for several years. ?The announcement by Satyam?s chairman and co-founder that he had directly falsified accounting documents on an ongoing basis has thrown the entire Indian outsourcing industry into dramatic turmoil. ?As a provider of back-office services for many of the largest banks and healthcare institutions in the world, the result of the SATYAM crisis is nothing short of devastating.

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By Friday, January 9, 2009 news sources were reporting that interim CEO Ram Mynampati does not have faith that the firm can continue past the next few weeks. ?Mynampati stated they were working to find the liquidity to pay current employees, suppliers, and creditors.?

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In less than a week, the crisis has crossed the Pacific Ocean and hit U.S. shores. ?Auditing giant PricewaterhouseCoopers is expected to pay a hefty price for the emerging fraud. ?The auditor has been responsible for Satyam financial oversight for over eight years, and Satyam investors are expected to go to court in attempts to recoup losses. According to legal sources from within India, most are likely to attack PricewaterhouseCoopers directly rather than Satyam.

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The tragic events of November 2008 in Mumbai clearly show that the concerns go much deeper. Over 200 people were killed in the attacks, and the entire central business district in Mumbai ground to a halt for several days, resulting in billions of dollars in lost labor. ? Within one week of the attacks, five high-profile Indian cabinet members were forced to resign. ?On 1 December, TIME magazine posed the question ?Will India?s Government Survive the Mumbai Massacre??

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Many companies are selecting alternate destinations, and some trends show an actual migration OUT of India to other knowledge-rich environments such as Singapore, The Philippines, Armenia, Pakistan, and various Latin American countries. ?Companies requiring less interaction with the public (for example, a software development center) may select destinations where English is not the primary language, or in some cases, is not a language spoken at all. ?Companies building public-facing operations such as helpdesks or call centers are being forced to reconsider earlier decisions, and many are moving to more English-centric countries like Taiwan and the Philippines.

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Key players are making a strong case for themselves as these trends develop. ?In the Western Hemisphere, Costa Rica and Peru have marvelous records of rock-solid software development and high customer satisfaction ratings. ?In Europe, Armenia is emerging as a major powerhouse and model of efficiency. ?In Asia, many are discovering that the almost-perfect English spoken in Taiwan and the Philippines combined with some labor costs equal to or less than those in India make each a destination of choice. ?In fact, the November 30 edition of The New York Times Magazine featured a four-page article touting the viability of the Philippines as a premier outsourcing destination.

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While China, Russia, and Korea have fantastic talent pools, the labor cost and in some cases difficulty dealing with local and national governments make them less attractive to some U.S. based companies.

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While being one of the lesser-mentioned yet more historically colorful European countries, Armenia is a virtual strongbox of extraordinary talent. ?As mentioned by the CIA World Factbook, 18% of Armenia?s current population is under the age of 15, meaning the talent pool is poised for huge growth.

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Armenia declared independence from the former Soviet Union on 21 September, 1991 and is now a bastion of political stability (a particularly attractive factor for the O&O industry). ?A healthy GDP real-growth rate of 13.7% makes Armenia one of the top producers in the EU.

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Additionally, Armenia is rapidly becoming a major challenger in the index of relative economic freedom. As reported by the Heritage Foundation, the change has been nothing short of amazing. In 2000, Armenia ranked 84th in relative economic freedom. As of late 2008, Armenia ranked 28th ? ahead of European powerhouses Spain (31st) and France (48th) and just behind Sweden at 27th.

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Hong Kong ranked #1 on the list for 2008, with the U.S.A. at #5.

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The appraisal of economic freedom is based on 50 economic indicators within the following categories: capital flow and foreign investment; financial systems; monetary, budget, and trade policies; salaries and prices; government interference in the economy; property rights and regulations; and black markets.

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Many outsourcing experts are finding a presence in Armenia quite successful for many of their clients and partners. ?The cooperation offered by the Armenian government to ease immigration and visa restrictions for executives and other technical employees traveling between Armenia and the United States has been a huge advantage to many, and this is compounded by great satisfaction with the talent pool offered by this European country.

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Having a stable presence in Armenia is but one example of alternatives to the current Indian instability. ?There are numerous other alternatives as well, and diversification is going to be the keystone to success over the next few years. ?

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As pointed out by one CEO, ?…the logical approach for today?s global economy is to diversify. ?Many of my contacts who previously invested heavily in Indian resources are already asking for new alternatives, and we believe the best approach is to simply avoid the old clich? of ?putting all the eggs in one basket.?

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Singapore has emerged as another destination of choice, with an extremely stable economy and government as well as strictly enforced laws on intellectual property rights. ?Perfect English is widely spoken, and the country is considered one of the top-five technical innovators in the world.

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Originally founded as a British trading colony in 1818, Singapore joined the Malaysian federation for a short two years ending in 1965. Now completely independent, Singapore is undeniably one of the most prosperous, diverse, and cosmopolitan destinations in the world and has a per capita GDP greater than that of many ?leaders? in Western Europe. ?

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In 2006, the World Bank rated Singapore as ?the most business-friendly economy in the world.? ?Immediately behind London, New York, and Tokyo, Singapore is the fourth largest foreign exchange trading hub in the world. ?

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The country is home to three major state universities: ?The National University of Singapore, Nanyang Technological University and Singapore Management University, resulting in a literacy rate over 93%. ?The island nation accomplishes it all with a geographic size only three times that of Washington, DC.

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The Philippines and U.S.A. share not only a very similar legal system but the English language as well. Companies in the legal sector consider this fact especially attractive. Once a U.S. colony, the Philippines has a workforce that is already familiar with many legal factors not readily obvious to those in countries with less of a seasoned relationship with the United States.?

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A few facts about the Philippines:

  • ?Population of 91,000,000 as of 2008
  • ?550,000 college graduates per year on Average
  • ?Educated labor pool of Over 30,000,000
  • ?Entry-level I.T. salaries average $2500?$8000 USD P.A.
  • ?Top-quality CBD real-estate costs average $17 PSF
  • ?95% literacy rate
  • ?English as a primary language

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One of the top-three law firms in the world relocated their entire network operations center from Chicago to Fort Bonifacio, Manila, in 2003. That operation has since grown much larger, also encompassing legal operations and software development.

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From 1997 to 2008, companies such as Citibank, Fluor, IBM, Convergys, Telus, HSBC, Dell, JP Morgan, Siemens, and Deutsche Bank have all opened major offshore facilities in the Metro Manila area of the Philippines.

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More than just a country filled with call centers, the Philippines is home to dozens of offshore operations involving network operations, wireless services, energy, shipping and logistics, legal and medical transcription, finance and accounting, and software development.

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The country is now recognized by some as the top destination of choice in Southeast Asia. In 2006, the country generated in excess of $3.0 billion in outsourced operations, and that figure is expected to more than double by the end of 2009. The Philippine government has targeted a global market share of 8 to 10% in the O&O market by 2011.

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Regardless of where you go, there is no ?single best answer? to every situation. ?When looking for that ?trusted advisor? to help you make your next outsourcing, offshoring, development, or infrastructure decision, you need a firm with the knowledge, process, devotion, and proven direction to make it a success.

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Only by in-depth knowledge of your core business can any firm help in an effective O&O engagement. You need a firm that endeavors to understand and optimize how the process will enhance not only the I.T. department, but all other business units as well.

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?O&O will continue to gain momentum over the next few years, regardless of what happens in the Indian subcontinent. ? The recent events in India and the surrounding territories are but a small stumbling-block to an ever-evolving global business model. ?

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Businesses today realize that three very important factors have emerged in the outsourcing and offshoring industry:?

  • O&O cannot and should not be based on the ?one size fits all? methodology anymore. ? Diversification is the key.
  • Every situation is different.
  • Unless you are prepared to invest in learning foreign tax and H/R systems, unfamiliar holidays, unique infrastructure, governmental regulations, and possibly a few foreign languages, you NEED a trusted advisor on your side.

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Companies and their investors who spent the billions of dollars (and thousands of man-hours) building outsourced operations based solely in India have found that trying to separate the technology from the actual business process is not only foolish?it is futile. ? Outsourcing and offshoring can provide limitless possibilities, but they must be done with precision , care, and proper distribution.? Rather than outright withdrawal from offshoring operations, now is the time for diversification.

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?There is timing in the whole life of the warrior, in his thriving and declining, in his harmony and discord. Similarly, there is timing in the Way of the merchant, in the rise and fall of capital. All things entail rising and falling timing. You must be able to discern this..??

Miyamoto Musashi , 1645

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October 30, 2009

Looking to Sell Your Information Technology Company - Avoid Some Common Mistakes

Filed under: Finance — Tags: , , , , , , , , — admin @ 12:52 pm

Selling your information technology business is the most important transaction you will ever make. Mistakes in this process can greatly erode your transaction proceeds. Do not spend twenty years of your toil and skill building your business like a pro only to exit like an amateur. Below are ten common mistakes to avoid:

1. Selling because of an unsolicited offer to buy - One of the most common reasons owners tell us they sold their business was they got an offer from a competitor or more often these days, an Indian company looking to buy a customer base in the United States. If you previously were not considering this business sale, you probably have not taken some important personal and business steps to exit on your terms. The business may have some easily correctable issues that could detract from its value. You may not have prepared for an identity and lifestyle to replace the void caused by the separation from your company. If you are prepared, you are more likely to exit on your own terms.

2. Poor books and records - Business owners wear many hats. Sometimes they become so focused on the next version release that they are lax in financial record keeping. A buyer is going to do a comprehensive look into your financial records. If they are done poorly, the buyer loses confidence in what he is buying and his perception of risk increases. If he finds some negative surprises late in the process, the purchase price adjustments can be harsh. The transaction value is often attacked well beyond the economic impact of the surprise. Get a good accountant to do your books.

3. Going it alone - The business owner may be the foremost expert in GUI interfaces, but it is likely that his business sale will be a once in a lifetime occurrence. Mistakes at this juncture have a huge impact. It is especially critical to have a good M&A advisor if you are selling an information technology company because these companies do not fit traditional company valuation metrics. If an owner does not get the right representation and have several qualified buyers that covet his technology, he possibly can leave a lot of money on the table. Selling a technology company is complex. Is it a better deal to structure some of the transaction value as an earn out based on post acquisition sales performance?

Do you understand the difference in after tax proceeds between an asset sale and a stock sale? Your everyday bookkeeper may not, but a tax accountant surely does. Is your business attorney familiar with business sales legal work? Would he advise you properly on Reps and Warranties that will be in the purchase agreement? Your buyer’s team will have this experience. Your team should match that experience of it will cost you way more than their fees.

4. Skeletons in the closet - If your company has any, the due diligence process will surely reveal them. One of the key issues in information technology companies is the clear title to intellectual property. Are your employee agreements well written? If you hired outside programmers, was their agreement specific in ownership of their output? The concern of the buyer is that once it becomes public that the deep pockets company is owner, previous disgruntled employees or contractors may resurface looking to bring legal action.

Before your firm is turned inside out and the buyer spends thousands in this process and before the other interested buyers are put on hold - reveal that problem up-front. We sold a company that had an outstanding CFO. In the first meeting with us, he told us of his company’s under funded pension liability. We were able to bring the appropriate legal and actuarial resources to the table and give the buyer and his advisors plenty of notice to get their arms around the issue. If this had come up late in the process, the buyer might have blown up the deal or attacked transaction value for an amount far in excess of the potential liability.

5. Letting the word out - Confidentiality in the business sale process is crucial. If your competitors find out, they can cause a lot of damage to your customers and prospects. It can be a big drain on employee morale and productivity. What if your head of systems development gets skittish and entertains offers from other companies and leaves while you are selling? The buyer wants your top people and they represent a significant portion of your future transaction value. If word you are for sale gets out, your suppliers and bankers get nervous. Nothing good happens when the work gets out that your company is for sale.

6. Poor Contracts - Here we mean the day-to-day contracts that are in place with employees, customers, contractors, and suppliers. Do your employees have non-competes, for example? If your company has intellectual property, do you have very clear ownership rights defined in your employee and contractor agreements. If not, you could be looking at meaningful escrow holdbacks post closing. Are your customer agreements assignable without consent? If they are not, customers could cancel post transaction. Your buyer will make you pay for this one way or another. If you are tempted to sign that big deal at bargain rates to pump up your business selling price, think again. Locking in a contract at below market rates could actually cause a discount to your selling price.

7. Bad employee behavior - You need to make sure you have agreements in place so that employees cannot hold you hostage on a pending transaction. Key employees are key to transaction value. If you suspect there are issues, you may want to implement stay on bonuses. If you have a bad actor, firing him or her during a transaction could cause issues. You may want to be pre-emptive with your buyer and minimize any damage your employee might cause.

8. No understanding of your company’s value - Business valuations are complex. A good business broker or M & A advisor that has experience in your industry is your best bet. Business valuation firms are great for business valuations for gift and estate tax situations, divorce, etc. They tend to be very conservative and their results could vary significantly from your results from three strategic buyers in a battle to acquire your firm. Where a services business may sell for between 75% and 100% of last years sales, for example, technology companies are all over the map. One of our clients had a coveted piece of software technology and was able to get 8 X last years sales as his purchase price. We certainly could not have and would not have predicted that at the start of the engagement, but what a nice surprise. When it comes to selling your company, let the competitive market provide a value.

9. Getting into an auction of one - This is a silly visual, but imagine a big auction hall at Sotheby’s occupied by an auctioneer and one guy with an auction paddle. “Do I hear $5 million? Anybody $5.5 million?’ The guy is sitting on his paddle. Pretty silly, right? And yet we hear countless stories about a competitor coming in with an unsolicited offer and after a little light negotiating the owner sells. Another common story is the owner tells his banker, lawyer, or accountant that he is considering selling. His well-meaning professional says, “I have another client that is in your business. I will introduce you.” The next thing you know the business is sold. Believe me, these folks are buying you business at a big discount. That’s not silly at all!

10. Giving away value in negotiations and due diligence - When selling your business, your objective is to get the best terms and conditions. I know this is a shocker, but the buyer is trying to pay as little as possible and he is trying to get contractual terms favorable to him. These goals are not compatible with yours. The buyer is going to fight hard on issues like total price, cash at close, earn outs, seller notes, reps and warranties, escrow and holdbacks, post closing adjustments, etc. If you get into a meet in the middle compromise negotiation, before you know it, your Big Mac is a Junior Cheeseburger.

Due diligence has a dual purpose. The first is obviously to insure that the buyer knows exactly what he is paying for. The second is to attack transaction value with adjustments. Of course this happens after their LOI has sent the other bidders away for 30 to 60 days of exclusivity. If you don’t have a good team of advisors, this can get expensive

As my dad used to say, there is no replacement for experience. Another saying is that when a man with money and no experience meets a man with experience, the man with the experience walks away with the money and the man with the money walks away with some experience. Keep this in mind when contemplating the sale of your business. It will likely be your first and only experience. Avoid these mistakes and make that experience a profitable one.

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Make and Multiply Your Money, Online

Filed under: Finance — Tags: , , — admin @ 4:47 am

‘Money is honey, my little sonny. And a rich man?s joke is always funny?’.

The one that said this would most certainly be someone who knew the way the world treats the haves and have-nots. Some of the richest men in the world today were not born rich. But they were smart enough to make their money during their lifetime to ensure that they certainly die rich.

It?s not just enough to make oodles of money, but to save and invest wisely our hard earned money is far more important. When life is on a fast track with little time to spare for anything other than work, managing money can be a very difficult task. And as we expand our personal lives with spouse and children, the need to save and provide funds for their present and future needs also add up to our financial woes. It requires effective financial tools and strong financial advice to ensure effective money management.

The days of managing our personal finance with the help of a personal finance advisor, who charges a bomb, is long gone. The internet is fast becoming an excellent tool to help us in personal finance management. It can do all that a personal finance manager can do and much more.

From tracking our accounts, reminding due dates for payment, updating our accounts, offering financial advice to help us set and achieve goals, personal finance management is much easier online. Personal finance software link all our accounts in banks, credit cards and other financial accounts in one single place and provide us a large and updated picture of our financial position. The need to remember a dozen usernames and passwords of different accounts is also done away with, since all the accounts are linked to one single place.

The most attractive reason to opt for online money management using personal finance software is that unlike personal finance managers, most of these sites available online offer free personal finance management service. It?s no wonder that most internet users opt for online money management software.

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October 29, 2009

Double the Benefits with Auto Trading in the Forex Market: How to Save Time and Make More Profits

Filed under: Finance — Tags: , , , , , , , , , — admin @ 8:53 pm

You should seriously think about Forex market trading if you?re looking to expand your current investment portfolio. The Forex market has some of the lowest commissions in the industry. It?s also open 24 hours a day, from Sunday evening 7:00 EST to Friday afternoon 4:00 EST. You can choose between analyzing the market data yourself, or having a robot do it for you (auto trading). What are the benefits of auto trading?

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  1. Availability of information. An automatic trader gives you all the information you need, and makes you a better, more knowledgeable, well-rounded and confident trader in the long run. You don?t have to guess where to place your entry or stop loss in a Forex market trade with such a trading robot. The signals on an automatic trader provide up-to-date information using cutting edge technical and statistical analysis.

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  1. Automated trades. Your robot (called ?Expert Advisor?) can check the progress of each trade and without human intervention it can readjust a trailing stop-loss to gradually lock in profit. The software can automatically issue a real-time Buy or Sell signal alert when a series of conditions are met. Robots make successful Forex trading easy, affordable and accessible to anyone and their hassle-free systems can be downloaded and used anywhere in the world.

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  1. You don?t need to pay your auto trader a commission. What you make you keep ? there are no additional fees. You just pay one price to acquire the product, usually around $100, depending on the publisher. Most publishers want to keep their products as competitive and up-to-date as possible, so you?ll get free updates for life. The Forex robot watches your account round the clock, and never tires.

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  1. Auto traders remove the element of human emotion. The two human emotions that cause losses in the market, fear and greed, are totally eliminated with an auto trader. It enhances your trading options and pushes you to higher goals. This type of software is becoming increasingly popular for consumers who would otherwise be lost in the unpredictability of the financial markets.

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  1. Auto trading is flexible. You can continue to focus on your own trading strategies, develop new ones, and still use the auto trading robot to profit. You can run an auto trader from your own desktop, or have it installed on a remote server. Whenever a trade signal is generated, your Forex auto trader will place a trade, whether or not you?re at your computer.

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  1. The size of your investment does not matter. You can start making profits with tiny investments of only a few hundred dollars. Forex trading can now be done by almost anyone with ease; it is no longer the domain of large banks and financial institutions. It also allows you to manage more than one account at a time, giving you the freedom to operate in several marketplaces using different systems.

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  1. Auto traders work with a plan. No matter how nasty or uncertain the market looks, the auto trader will stick to its plan. It?s impossible for a human to watch a dozen indicators, pivots, fibs, support and resistance levels on multiple timeframes and make a trading decision within half a second. That?s exactly what the Expert Advisor does, 24 hours a day, for you.

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These are the benefits you can get from using Forex trading robot software. You will see that trading in the Forex market using this kind of software is far easier, and you should take full advantage of its potential for generating profits. Our system compares the different auto traders on a live graph, in order for you to minimize the risk of losing money and maximize your profits.

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Are You Searching For An Automated Way To Trade Online?

Filed under: Finance — Tags: , , , — admin @ 12:53 pm

Automated trading is a comprehensive way for the forex exchange market and early indications are that sales are hot. These programs call for no experience and is created to function on autopilot and make you money. All that you need is a reliable Internet connection and an ability to have your computer run continuously. Let me reiterate, this thing allows you to set it, forget it, collect your cash. Most of these “robots” were tested and on average the software creates 20 winning deals in a row.


Wait, did I jump the gun? Do I need to explain forex? Forex is a currency exchange market designed to trade the frequent fluctuations in international currency. Meaning that if you would look at the American dollar versus the euro in 2000, when the two were about even, and purchased the euro, you would have made about 50% up to this point, as the euro is now much stronger versus the american dollar.

A forex automated advisor allows even trading newbies to flourish in the competitive field of foreign currency exchange.


Perhaps you have heard of money managers trading managed accounts that can require a hefty set of fees for your profit as well. Most of these automated software programs are not like that. Another thing that I’m sure most people bring up is the price of these automated programs. Why so much? Well if you really sit down and think about it, and weigh your pros and your cons of having or not having the software, the price is worth it, especially for what this software can do for you! And the price tag isn’t going to cost you an arm and a leg, you wont have to put your house up for sale or anything like that.


In fact the most expensive one I saw was a few hundred bucks. And to me even that’s worth buying, for the amount of financial security it could very well end up bringing to the table.


The forex auto bot as I like to call it is an expert advisor for the average individual who either does not want to or lacks the time to learn the system, and as with any Forex automated advisor due diligence should be exercised. The beautiful thing about the Forex, unlike stock trading, is that the forex is a 24-5 deal, you can make money constantly, provided you have the right equipment like some of the automated forex programs out there!

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October 28, 2009

Advice and Answers for Questions. Personal Adviser, Knowledge and Educational Tool

Filed under: Finance — Tags: , , , , , , , — admin @ 8:55 pm

Have Questions? Need Advice? Looking for Assistance with Assignments and Document Editing? Wish to share knowledge, Help People, and earn money? BrainyYack is a Right Place for you…

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Click here to have your essays proofread and assignments completed.

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24 hours a day and 7 days a week. Members are able to search through advisors credentials to find which advisors will be able to provide them with the best answers. Search through our large list of categories to find information on your related question topic.

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BrainyYack provides a place to bring advisors and consumers together to receive services over the internet that are available at a reasonable cost

We are constantly changing our system to benefit our users. We have improved our payment system. When you assist a member by answering a posted question/assignment, you are able to place a bid price for your answer.

Ask advice online. BrainyYack provides a place for knowledge exchange for a cost the member and advisor agree upon.

Our goal is to become the leading website for consumers to obtain expert advice and assistance on a wide verity of subject. BrainyYack develops software, processes and has created a unique business model which drives consumers and advisors to use the internet for advice. Its proprietary web site, brainyyack.com will become the leading web site where advisory based exchange(s) between consumers and advisors will occur in unique niche markets over the Internet. BrainyYack?s knowledge engine allows consumers and business to search our brainbank to find advice or ask online advisors if the answer is not found.

BrainyYack provides a place for knowledge exchange for a cost the member and advisor agree upon. This is also a great way for advisors to expand their customer base and advisory services. Our knowledge system stores and retains all knowledge our advisors, and provides a fast way to access information for similar questions. If you?re a person or business looking to expand your services to the web and need to find a consumer base fast, BrainyYack is here for you at any time of the day. BrainyYack?s knowledge center and advisors are accessible over the internet 24 hours a day and 7 days a week.

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October 26, 2009

Landlord Tips - Avoiding the Huge Costs of Tax Preparation

Filed under: Finance — Tags: , , , , , — admin @ 4:51 am

As a landlord, your tightest months for cash flow are usually at the end of the winter and beginning of spring, in March, April and May. You’ve just finished paying for the extra costs that winter brings; sky-high utility bills, snow and ice removal, heating issues and so on. Not only that, but any vacant units probably took longer to fill because people are less likely to move during the winter. You might even have had damage from ice dams or frozen pipes.

The end of the winter is the worst possible time to get a huge unexpected bill. And yet here it comes; hundreds or even thousands of dollars due to your tax advisor.

Fortunately, there are ways to really reduce this bill without adding a lot to your workload. The key is to organize your tax documents in a way that will let your CPA or bookkeeper (or yourself, if you do your own business taxes) prepare your return in a lot less time.

I use property management software to organize all of my income, expenses and assets, and make sure that my bank account statements match up with my own personal accounting. It’s faster than maintaining my records in Excel, and it only takes a little longer than the method used by lots of old-school landlords; stuffing all their records into a shoebox and hoping for the best.

Because you?re organizing your landlording income and expenses in your property management software as they occur throughout the year, they are completely organized and ready for you at the end of the year, at tax prep time. Somebody?s going to be doing a lot less work then ? either your tax advisor (which means you pay him less) or yourself (which means you get to bed earlier).

You want your records to be organized along the categories of the IRS Schedule E form, which you use to report rental property income and loss, along with income and loss from related investments such as partnerships and trusts. You’ll need to submit an IRS Schedule E along with your 1040 tax return. You’ll also take the summarized results from the Schedule E and incorporate them into your 1040 calculations. You can do all this with the correct property management software.

There are two Schedule E categories for Income and 14 for Expenses. For Income, any time you receive rents, you’ll record them in your rental property program as a deposit; thus updating both your bank account records and your ledger account records. For Expenses, any time you spend money on anything related to your properties, you’ll record those Expenses either through the check register or a journal entry. Your property management program should let you enter any Expense under a category that matches a Schedule E category; they are Advertising, Auto and Travel, Cleaning and Maintenance, Commissions, Insurance, Legal and other Professional Fees, Management Fees, Mortgage Interest, Other Interest, Repairs, Supplies, Taxes, Utilities, Other, and Depreciation. Some of these property management expense categories will make perfect sense to you, but others may need explanation.

? Advertising: this is really all of your marketing expenses, including things like signs and web postings.

? Auto and Travel: this is an easy Expense to miss because you won’t pay it with a check or something else that’s easily tied to your bank accounts. One option is to record all the actual expenses such as gas, oil and depreciation. The other, simpler way is to just record your mileage spent on business travel and multiply the total times the current per-mile expense rate (48.5 cents for 2007).

Not only is it simpler to record expenses this way, it may also be a better deal for you. That 48.5 cents per mile applies whether you are driving a new Hummer H2 or an old Toyota Corolla. Obviously you spend a lot less than 48 cents a mile driving that old Toyota (and it makes a better impression on your tenants).

You should record auto expenses by mileage every time you take a trip related to your investments; these include every time you drive to a building. Once per month, if you can do so, pay yourself for the mileage or any other expenses from personal funds with a check from your business account. Record that as well. You can also expense tolls and parking fees, but not tickets or other legal fees from parking or driving violations.

? Mortgage Interest: new landlords often think they can expense all of their debt service, which is your mortgage payments plus any other money paid toward retiring the loan. But you can’t expense the money that goes toward principal because it’s not really an expense. For example, suppose you make a $1,000 mortgage payment, $200 of which goes to principal and the rest to interest. By doing so, you spend $1,000 from your checking account, while increasing your equity in the property by $200. The correct transaction will be a $1,000 credit to the checking account, an $800 debit to the Mortgage expense and a $200 debit to the Building Equity Asset account. Your rental property program should calculate this automatically.

? Depreciation: this expense relates to the natural deterioration that happens to almost any long-lasting asset. Most landlords think of depreciation in terms of buildings. For example, most residential buildings have a depreciation period of 27 1/2 years. This means that you can take 1/27.5 (3.63636… percent) of the building’s value as an expense each year; until you’ve owned it for 27.5 years or sell it, whichever comes first. How are you going to determine the building’s value? Multiply the purchase price by this ratio: building assessment / overall assessment. You can usually get the assessments from the town or county.

It makes a lot of sense to depreciate items in a building separately from the building itself, because such items usually have shorter recovery periods (meaning you can take more of the value - as much as 20 or even 33 percent - each year until the end of the period).

Depreciation is tricky - one reason is that the federal government frequently changes depreciation rules in esoteric ways. For example, they changed the rules to make investing in New York City more appealing after the 9/11 attacks. It may make sense to get some additional help from your tax advisor here.

Around February 1st of the new year, print out a profit and loss report and all of your bank reconciliation reports for the previous year. All of this information will be neatly organized by your property management software. Review the reports carefully and either send them to your tax advisor or enter the information into tax forms yourself. If you send them to your tax advisor, include the actual bank statements as well. He’ll want these records to prove that you recorded all of your financial transactions honestly.

At the same time, make sure your CPA or bookkeeper knows that you’re NOT expecting him to do your Schedule E calculations all by himself. You don’t expect to be charged for all that work, either.

Last point - even though property management software is going to help you with your recordkeeping and calculations, don’t throw out your paper records. You’ll need them if you are ever audited.

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October 24, 2009

3 Rules for Using Forex as an Alternative Income Stream

Filed under: Finance — Tags: , , , , , — admin @ 8:46 pm

It is quite easy to make a living trading Forex and this is one of the best ways to make a passive income online. It can also be painful if you are not prepared to suitably manage the risks involved in this type of business. Whether or not your Forex trading venture is successful will depend greatly on how you choose to carry it out. When we train novice traders on how to improve their market performance, we start off with these 3 laws Forex traders should never, ever forget:

Forex Rule 1: Forex trading can be done by anyone, once he or she is willing to use a robot. These robots usually come prepackaged with functions that analyze current trends. As a former trader for a large bank, I can testify that financial institutions analyze trends the very same way: they run the numbers through mathematical formulae trying to find patterns. More mathematical formulae are used to determine the cause and effect of each pattern. Even if you don?t want to entrust your trading to a computer program, and you hire someone to analyze market data for you, that person will use the math formulae that your Forex robot calculates automatically

Robots, also known as Expert Advisors (or EA?s), are all different and unique in the way they enter and exit the market. However, they all help to eliminate emotionally based decisions, thus providing a different, more accurate way to trade Forex. There are different types of Expert Advisors, the most popular being scalper expert advisors, which attempts to repeatedly secure small profits as soon as they?re available,? breakout expert advisors, designed to open a trade when the price breaks through predestined support and resistance levels , swing trading Expert Advisor which capture large price swings in the market and news expert advisors, which take advantage of news events and the large price shifts that can occur during financial news releases.

?Forex Rule 2: You will need to set up and use a MetaTrader. Many creators of Forex robots configure them to work specifically on the MetaTrader 4 platform, because it?s the most popular, user-friendly and free platform. It features advanced charting that is capable of integrating the robots. The installation process is fairly easy. You simply download the software you are provided with to your computer and follow the instructions to load it to the MetaTrader platform.

?Automated Forex trading systems have created lots of interest in recent times. Anyone with Internet access and a Forex brokerage account can participate. You don?t have to be a veteran trader to earn income because the automated Forex trading systems looks after all the work for you. You can use these systems any time you like ? they do not require your presence.

?Forex Rule 3: You must be willing and have the discipline to practice before risking real money.? The Forex market allows you to practice the automatic trading on a demo account. These practice accounts let you make trades using real-time rates, the only difference being that the funds you?re using is just play money. The length of time needed on a demo account varies for different individuals, but most people need at least a month on a demo account.

?It?s important to note that automated Forex software is by no means the Holy Grail of trading currencies. These systems make errors sometimes, but the aim of their developers is to win more than lose, and have the profits greatly outweigh the losses.

?The Forex market is hard for novices to figure out. Automated trading software is a great tool that you can use to start trading almost right away. The charting and trading software can really allow you to make some serious profits.

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October 23, 2009

Altico and Visibility Co-sponsor Webinar on a Web-based Solution for Manufacturers

Filed under: Finance — Tags: , , , , , , — admin @ 4:51 am

On June 20th, two Microsoft Certified Partners - Altico Advisors and Visibility Corporation - sponsored a one-hour online presentation of the VISIBILITY.net application for manufacturers of complex products. This fully integrated Enterprise Resource Planning (ERP) system provides everything from Material Requirements Planning (MRP) and Capacity Requirements Planning (CRP) to Financial Management, Customer Relationship Management (CRM), reporting, analysis, and forecasting.

Built on the Microsoft.NET platform, VISIBILITY.net is a Web-based system that drives optimized effectiveness across the entire enterprise. Functionality includes Engineering and Product Lifecycle Management, Product Configurator, CAD interface, Material and Production Planning, Routing, Shop-Floor Control, Operations Management, Costing, and the list goes on?and on.

The presentation focused on five key areas that provide a strategic advantage for manufacturers:

- Integrated business functions

- Global features (multi-entity, multi-lingual, multi-currency, multi-plant)

- Compliance based controls for financial and SOX audits

- Collaboration via workflow and self-service portals

- Business performance management

The Q&A session that followed the product demonstration was active and informative. A link to the audio/video recording of the entire event is available through Altico Advisors by contacting the marketing director, Marcia Nita Doron, by phone at 508-485-5588 x107 or by e-mail at mdoron@AlticoAdvisors.com.

About Altico Advisors

Headquartered in Massachusetts, Altico Advisors implements and supports business, financial, and customer management software solutions for mid-market companies throughout New England. Altico is a Microsoft Certified Partner and a VISIBILITY.net ERP Certified Partner specializing in ERP and CRM systems for manufacturing, distribution, software development and service companies. In addition, Altico provides a wide variety of consulting and advisory services, such as outsourced financial services, business and IT strategy alignment, software selection, and business analytics. www.AlticoAdvisors.com

About Visibility Corporation

Visibility is a leading provider of integrated enterprise software for manufacturers of complex products. Visibility ERP solutions have enabled over 18,000 users worldwide to integrate and optimize their entire business operations. Built using the latest technology, VISIBILITY.net ERP, is a highly scaleable suite of integrated business modules including; quoting, product configuration, engineering, manufacturing, projects, supply chain, financials and after-market. Integrated workflow and web based reporting provide procedural speed and powerful information accessibility 24/7. Multi-language and currency support facilitate business growth globally. Visibility offers a full range of services to promote rapid return on investment and low total cost of ownership.

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October 22, 2009

Here Are Hot Stock Picks For 2007 And Beyond

Filed under: Finance — Tags: , , , , — admin @ 8:48 pm

It seems like everybody has their own hot picks these days. Watching CNBC, you are bombarded by commercials for various systems that get you the hot stock picks.

In publications such as Investors Business Daily there are typically several pages devoted to software programs and web sites that promise hot picks for quick trades.

Obviously, if all of these so-called hot stock picks were as hot as their pervaders proport, then they wouldn’t need to hock them in cheesy commercials. Most of these systems and programs promise easy money, but sensible people know that nothing comes easy on Wall Street.

Instead of promising a foolproof system for chart-based trades, this article delivers truly hot picks for 2007 and beyond, based on the actual business fundamentals of the underlying companies.

A word of caution about these hot stock picks: These hot picks are solely for entertainment purposes. I mention these stocks only to offer my own thoughts and opinions, and to perhaps spark some ideas.

I am not recommending that you buy these hot stock picks without first doing substantial research and then discussing them with your financial advisor.

With that out of the way, on to the hot picks. I have broken the stocks into two groups:

Hot stock picks for companies with substantial opportunity for growth, and hot picks for companies with share prices that have recently been beaten down and may now be undervalued.

Hot Stock Picks: Growth

My hot stock picks for growth companies are EZCorp (EZPW) and Paychex (PAYX).

EZCorp is an amazing, unheard of company that has been on a path of torrid growth. The firm operates pawn shops and payday loan centers under the names EZPawn and EZMoney, respectively. Currently, the company has over 500 stores in 13 states, with plans to establish another 125 locations in the works.

What I love about this company is that its business model allows it to do well in good times and in bad. In 2005, it loaned close to $600 million to cash and credit constrained customers, and the company’s earnings per share (EPS) has more than quintupled in the past four years.

With a recent P/E ratio of just 25, the price hasn’t kept up with the growth of this, the first of my hot picks.

The second of my hot stock picks in the growth arena is Paychex. This is another unknown, but it shouldn’t be. Paychex is the nation’s second largest payroll processing firm, next to Automatic Data Processing.

It has recorded fifteen consecutive years of record profits, and it continues to diversify its business model in order to accelerate growth. Recently, it moved into benefits and human resources management. Another thing I like about this firm is that it has the small business market cornered, and has erected substantial barriers to entry for would-be competitors.

Hot Stock Picks: Value

Microsoft (MSFT) and Intel (INTC) need no introduction. They have both been beaten down badly in recent times and may have nowhere to go but up.

Microsoft’s Vista operating system should be a great catalyst, and after that, the firm has room to grow in the telephony industry.

Intel has suffered from intensifying competition with rival AMD, but it certainly has the resources to engineer a turnaround. Since most Windows-based machines run with Intel chips, Vista will also be a great catalyst for Intel.

Some would scoff at the characterization of such mega firms as Microsoft and Intel as hot picks, but the fact is that people have lost their senses when it comes to these great American companies, and they are just too cheap to ignore.

Growth companies should be bought each time they reach new highs, but beaten down value stocks like Microsoft and Intel, with solid business fundamentals and great brand names and products, should be purchased on dips.

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