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Quick quiz
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Each month I'll give you a new question.
Just reply to this email for the answer.
Who pioneered the use of photographic film and offered his first camera, called Kodak, for sale in 1888? |
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How to Calculate Return on Business Investment
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One of the most practical discoveries by an entrepreneur is the profitability ratio, called return on investment or ROI. Unfortunately, the deployment of different methods for measuring ROI creates confusion. One of the common procedures for determining ROI is dividing profit by business assets. Another process is dividing by net assets, which is the equity capital of the enterprise. This ratio is usually called return on equity, or ROE.
Your business equity is assets minus liabilities. That is, take what the business has (such as cash and equipment) and subtract what the business owes (such as a loan or credit card debt). Say you have a basic service operation that has a computer that cost $600. But you charged the computer purchase on a company credit card and still owe $100. In addition, you keep $9,500 in a bank account to provide cash flow to pay expenses until customers pay you. The business assets are $10,100 ($9,500 plus $600), but the business equity is $10,000 ($9,500 plus $600 minus $100). When your business has a profit of $50,000, the ROI based on assets is 495%, and the ROE is 500%.
Obviously, capital-intensive businesses have much smaller ROI because they need more assets. These organizations may need $250,000 of assets to generate $50,000 of profit. That delivers a 20% ROI. Regardless of the type of enterprise you operate, tracking ROI or ROE uncovers your business trend. This is different than merely examining dollar profit. A rising profit can trigger lower ROI and ROE if you need much greater assets to attain that profit. This result signals potential trouble from insufficient resources. |
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How to Win Big in Today's Economy
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The altered economic landscape presents innovative and nimble businesses
with opportunities to thrive.
Find out how by requesting my free
report "How to Win Big in Today's
Economy" by replying to this email.
Just reply to this email and I'll send it right out to you.
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Try These Simple Moves to Improve Your Productivity |
Although you may not be aware of it, your body language not only communicates to the subconsciousness of those around you but also sends signals to your own brain. According to the scientific theory of "embodied cognition," even a subtle gesture can shape our moods and attitude. Use this to your advantage: improve your productivity and conquer your workday by using these power poses, even if you're working primarily online!
According to Amy Cuddy, a social psychologist at Harvard Business School, you should hold your power pose for two minutes. Adopt the classic power pose by lifting your chest, holding your head high, and propping your hands on your hips for a flood of confidence-boosting testosterone before a big meeting. Stand with outstretched legs and arms for another morale-building pose.
If you need some help getting motivated to do admin like phone calls or answering emails, extend your legs or prop them up. Similarly, by placing your hands on your head with your elbows out, you'll not only improve posture and stand tall, but this power pose will also help with brainstorming or problem-solving.
When it comes to tough negotiations or tense meetings, rest your arm on the chair next to you. Taking up more space conveys power and conviction. You can also show others you're actively listening by remaining alert while they talk, nodding and maintaining eye contact.
Lastly, don't forget to smile. The act of turning your frown upside down improves serotonin and also boosts the happiness of those around you.
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Worth Reading |
Creating Shelter in the Storm: Pivoting Your Business in Response to COVID-19
By Rob Shelton
Business |
Iconic brands like Twitter, Starbucks,
and Wrigley's grew from pivots.
Granted, COVID-19 has resulted
in some more unusual ones: few
people thought they would see
brewers producing hand sanitizer.
But the principles and process of
pivoting successfully remain the same,
pandemic or not. Find inspiration and
instructions in this piece. |
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How to Train Your Mind for High-Pressure Situations, According to an Olympic Coach
By Betsy Mikel
Inc. |
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Your presentations or pitches may not be broadcast live like Olympic events, but they're just as important to you. You're naturally going to have an adrenaline burst when you're entering a high-pressure situation. The techniques that help athletes reach the podium can assist you. This article explains how losing control in practice and striving for excellence, not perfection, in execution can create success. |
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How to Harness the Power of Visualization for Success |
When we think about our life's ambitions, we often dwell on the obstacles that will surely arise along the way to fulfilling them. Positive visualization changes our tendency to make these obstacles insurmountable in our minds by envisioning the specifics of success and making your positive vision stronger than anything that can set you back.
Visualization rests on the principle of positive focus. With all the noise that surfaces during your daily life, you need to be able to focus on the most important aspects of your work and break things down into manageable tasks to get things done. The same concept applies to achieving your dreams. By finding the answers to questions like "What will it take?" and "How can I handle the obstacles?" your dream becomes actionable.
Once you've disempowered your doubts, spend time vividly picturing yourself achieving your goal with as many details as possible. For example, spend time thinking about a presentation you may be giving soon. Imagine your setup, the expressions of your audience, your posture, any questions that may arise, and, crucially, a positive response. Write down everything you've envisioned. When it comes to the actual event, you'll experience a feeling of familiarity, thereby boosting confidence.
Try to get into the habit of visualizing yourself flourishing in all facets of your life. Once you begin to feel your visualized triumph as if it were real, you'll cross the threshold that leads to action and make every day a success. |
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Share This Newsletter
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If you find this newsletter helpful or interesting, share it with those you care about.
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Growing Your Business - Productivity |
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Productivity is a skill that we all need to be taught. Here are some websites and apps that can help: |
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Organize it all with Todoist |
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Create and manage to-do lists for yourself and your team here.
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Do Nothing for 2 Minutes |
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You've earned a break. Get two-minute bursts of relaxation here.
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FocusWriter |
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This app creates a clean space for
you to write while also providing
you with dictionaries and other
resources to help you write more
and write better. It's free and
updated often.
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SelfControl |
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We can't create self-control by ourselves. This app, called SelfControl, allows you to block distracting websites and email for set amounts of time. It only works on Mac products, but an FAQ page tells you about similar Windows-compatible programs.
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3 Business Costs to Scrutinize After a Crisis |
After an unexpected financial shock to a business subsides, a cascade of new challenges impose unfamiliar burdens on the entrepreneur. Successful navigation of a return to normal demands distinctive planning skills.
Production Costs
Order fulfillment is perhaps the greatest issue confronting business restoration after a crisis setback. Before getting paid by customers, you have to endure the costs to deliver whatever you're selling. Delivery to customers entails meeting production deadlines, which requires time and resources. Depending on your industry, you may have to plan for staffing, warehousing, shipping, and inventory expenditures.
Monitor an upward trend in sales on your business financial statements. Compare the growth between various equal periods, such as months or calendar quarters, to identify if the rate of increase is escalating. When this pattern is discovered, action is necessary to plan for additional resources. You'll need third parties whose services can be enlisted for aiding production.
Making early connections with key outside resource providers is crucial for success. You need to engage in a vetting process by conducting due diligence evaluation of each potential source for staff, equipment, shipping, software, supplies, and inventory. This is not a cost-cutting exercise. Rather, you're engaging in a plan for cost expansion. But you must assure that the new expenditures result in efficiency.
If you've built relationships with the right third parties, your production costs should remain consistent as a percentage of sales. This means keeping close watch on a steady gross profit margin. That's how you'll know that increasing production costs are not outstripping sales growth.
Overhead Expenses
The higher profits associated with returning to conventional scale are a consequence of rising net profit margin. That's because your general overhead costs, unlike production costs, don't rise at the same rate as your sales increase. Nevertheless, some general administrative expenses are likely to escalate.
Customer service is the most common structural implication of restoring sales. New customers need attention. But you certainly cannot afford to neglect old customers. As the business founder, you will likely be tasked with more customer contact as your operation grows. This means preparing to relinquish many of the things you previously did yourself. That's when you should rely more on the services of outside experts for such matters as bookkeeping, advertising and promotion, and payroll preparation.
Taxes
The last, but most important, cost to scrutinize is tax compliance. This area must be your top priority in a growth environment. A business owner has sole responsibility for all tax obligations. But helpful assistance is available for the asking from your accountant. Be sure to obtain consultation about rising taxes as your business grows. Precise records are necessary to determine amounts and remittance dates for income tax, payroll taxes, and sales tax. Fortunately, automation is available that aids in tax calculations. But its proper use requires instruction. You must be knowledgeable about readying reports from these systems to spot mistakes and assure accuracy. So, this is yet another area where accounting professionals can teach you about optimal use of financial statements.
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This newsletter and any information contained herein are intended for general informational purposes only and should not be construed as legal, financial or medical advice. The publisher takes great efforts to ensure the accuracy of information contained in this newsletter. However, we will not be responsible at any time for any errors or omissions or any damages, howsoever caused, that result from its use. Seek competent professional advice and/or legal counsel with respect to any matter discussed or published in this newsletter. |
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