COMPETITIVE ANALYSIS

Identify and Analyze Your Competition

The competitive analysis is a statement of the business strategy and how it relates to the competition. The purpose of the competitive analysis is to determine the strengths and weaknesses of the competitors within your market, strategies that will provide you with a distinct advantage, the barriers that can be developed in order to prevent competition from entering your market, and any weaknesses that can be exploited within the product development cycle.

The first step in a competitor analysis is to identify the current and potential competition. There are essentially two ways you can identify competitors. The first is to look at the market from the customer’s viewpoint and group all your competitors by the degree to which they contend for the buyer’s dollar. The second method is to group competitors according to their various competitive strategies so you understand what motivates them.

Once you’ve grouped your competitors, you can start to analyze their strategies and identify the areas where they’re most vulnerable. This can be done through an examination of your competitors’ weaknesses and strengths. A competitor’s strengths and weaknesses are usually based on the presence and absence of key assets and skills needed to compete in the market.

To determine just what constitutes a key asset or skill within an industry, David A. Aaker in his book, Developing Business Strategies, suggests concentrating your efforts in four areas:

  1. The reasons behind successful as well as unsuccessful firms
  2. Prime customer motivators
  3. Major component costs
  4. Industry mobility barriers

According to theory, the performance of a company within a market is directly related to the possession of key assets and skills. Therefore, an analysis of strong performers should reveal the causes behind such a successful track record. This analysis, in conjunction with an examination of unsuccessful companies and the reasons behind their failure, should provide a good idea of just what key assets and skills are needed to be successful within a given industry and market segment.

Through your competitor analysis, you will also have to create a marketing strategy that will generate an asset or skill competitors don’t have, which will provide you with a distinct and enduring competitive advantage. Since competitive advantages are developed from key assets and skills, you should sit down and put together a competitive strength grid. This is a scale that lists all your major competitors or strategic groups based upon their applicable assets and skills and how your own company fits on this scale.

Create a Competitive Strength Grid

To put together a competitive strength grid, list all the key assets and skills down the left margin of a piece of paper. Along the top, write down two column headers: “weakness” and “strength.” In each asset or skill category, place all the competitors that have weaknesses in that particular category under the weakness column, and all those that have strengths in that specific category in the strength column. After you’ve finished, you’ll be able to determine just where you stand in relation to the other firms competing in your industry.

Once you’ve established the key assets and skills necessary to succeed in this business and have defined your distinct competitive advantage, you need to communicate them in a strategic form that will attract market share as well as defend it. Competitive strategies usually fall into these five areas:

  • Product
  • Distribution
  • Pricing
  • Promotion
  • Advertising

Many of the factors leading to the formation of a strategy should already have been highlighted in previous sections, specifically in marketing strategies. Strategies primarily revolve around establishing the point of entry in the product life cycle and an endurable competitive advantage. As we’ve already discussed, this involves defining the elements that will set your product or service apart from your competitors or strategic groups. You need to establish this competitive advantage clearly so the reader understands not only how you will accomplish your goals, but also why your strategy will work.

MARKET STRATEGIES

Define Your Market

Market strategies are the result of a meticulous market analysis. A market analysis forces the entrepreneur to become familiar with all aspects of the market so that the target market can be defined and the company can be positioned in order to garner its share of sales. A market analysis also enables the entrepreneur to establish pricing, distribution and promotional strategies that will allow the company to become profitable within a competitive environment. In addition, it provides an indication of the growth potential within the industry, and this will allow you to develop your own estimates for the future of your business.

Begin your market analysis by defining the market in terms of size, structure, growth prospects, trends and sales potential.

The total aggregate sales of your competitors will provide you with a fairly accurate estimate of the total potential market. Once the size of the market has been determined, the next step is to define the target market. The target market narrows down the total market by concentrating on segmentation factors that will determine the total addressable market–the total number of users within the sphere of the business’s influence. The segmentation factors can be geographic, customer attributes or product-oriented.

For instance, if the distribution of your product is confined to a specific geographic area, then you want to further define the target market to reflect the number of users or sales of that product within that geographic segment.

Once the target market has been detailed, it needs to be further defined to determine the total feasible market. This can be done in several ways, but most professional planners will delineate the feasible market by concentrating on product segmentation factors that may produce gaps within the market. In the case of a microbrewery that plans to brew a premium lager beer, the total feasible market could be defined by determining how many drinkers of premium pilsner beers there are in the target market.

It’s important to understand that the total feasible market is the portion of the market that can be captured provided every condition within the environment is perfect and there is very little competition. In most industries this is simply not the case. There are other factors that will affect the share of the feasible market a business can reasonably obtain. These factors are usually tied to the structure of the industry, the impact of competition, strategies for market penetration and continued growth, and the amount of capital the business is willing to spend in order to increase its market share.

Projecting Market Share

Arriving at a projection of the market share for a business plan is very much a subjective estimate. It’s based on not only an analysis of the market but on highly targeted and competitive distribution, pricing and promotional strategies. For instance, even though there may be a sizable number of premium pilsner drinkers to form the total feasible market, you need to be able to reach them through your distribution network at a price point that’s competitive, and then you have to let them know it’s available and where they can buy it. How effectively you can achieve your distribution, pricing and promotional goals determines the extent to which you will be able to garner market share.

For a business plan, you must be able to estimate market share for the time period the plan will cover. In order to project market share over the time frame of the business plan, you’ll need to consider two factors:

  1. Industry growth which will increase the total number of users. Most projections utilize a minimum of two growth models by defining different industry sales scenarios. The industry sales scenarios should be based on leading indicators of industry sales, which will most likely include industry sales, industry segment sales, demographic data and historical precedence.
  2. Conversion of users from the total feasible market. This is based on a sales cycle similar to a product life cycle where you have five distinct stages: early pioneer users, early users, early majority users, late majority users and late users. Using conversion rates, market growth will continue to increase your market share during the period from early pioneers to early majority users, level off through late majority users, and decline with late users.

Defining the market is but one step in your analysis. With the information you’ve gained through market research, you need to develop strategies that will allow you to fulfill your objectives.

BUSINESS DESCRIPTION

The business description usually begins with a short description of the industry. When describing the industry, discuss the present outlook as well as future possibilities. You should also provide information on all the various markets within the industry, including any new products or developments that will benefit or adversely affect your business. Base all of your observations on reliable data and be sure to footnote sources of information as appropriate. This is important if you’re seeking funding; the investor will want to know just how dependable your information is, and won’t risk money on assumptions or conjecture.

When describing your business, the first thing you need to concentrate on is its structure. By structure we mean the type of operation, i.e. wholesale, retail, food service, manufacturing or service-oriented. Also state whether the business is new or already established.

In addition to structure, legal form should be reiterated once again. Detail whether the business is a sole proprietorship, partnership or corporation, who its principals are, and what they will bring to the business.

You should also mention who you will sell to, how the product will be distributed, and the business’s support systems. Support may come in the form of advertising, promotions and customer service.

Once you’ve described the business, you need to describe the products or services you intend to market. The product description statement should be complete enough to give the reader a clear idea of your intentions. You may want to emphasize any unique features or variations from concepts that can typically be found in the industry.

Be specific in showing how you will give your business a competitive edge. For example, your business will be better because you will supply a full line of products; competitor A doesn’t have a full line. You’re going to provide service after the sale; competitor B doesn’t support anything he sells. Your merchandise will be of higher quality. You’ll give a money-back guarantee. Competitor C has the reputation for selling the best French fries in town; you’re going to sell the best Thousand Island dressing.

EXECUTIVE SUMMARY

Within the overall outline of the business plan, the executive summary will follow the title page. The summary should tell the reader what you want. This is very important. All too often, what the business owner desires is buried on page eight. Clearly state what you’re asking for in the summary.

The statement should be kept short and businesslike, probably no more than half a page. It could be longer, depending on how complicated the use of funds may be, but the summary of a business plan, like the summary of a loan application, is generally no longer than one page. Within that space, you’ll need to provide a synopsis of your entire business plan. Key elements that should be included are:

  1. Business concept. Describes the business, its product and the market it will serve. It should point out just exactly what will be sold, to whom and why the business will hold a competitive advantage.
  2. Financial features. Highlights the important financial points of the business including sales, profits, cash flows and return on investment.
  3. Financial requirements. Clearly states the capital needed to start the business and to expand. It should detail how the capital will be used, and the equity, if any, that will be provided for funding. If the loan for initial capital will be based on security instead of equity, you should also specify the source of collateral.
  4. Current business position. Furnishes relevant information about the company, its legal form of operation, when it was formed, the principal owners and key personnel.
  5. Major achievements. Details any developments within the company that are essential to the success of the business. Major achievements include items like patents, prototypes, location of a facility, any crucial contracts that need to be in place for product development, or results from any test marketing that has been conducted.

When writing your statement of purpose, don’t waste words. If the statement of purpose is eight pages, nobody’s going to read it because it’ll be very clear that the business, no matter what its merits, won’t be a good investment because the principals are indecisive and don’t really know what they want. Make it easy for the reader to realize at first glance both your needs and capabilities.

BUSINESS PLAN

A Business Plan is a formal statement of business goals, reasons they are attainable, and plans for reaching them. It may also contain background information about the organization or team attempting to reach those goals.

Business plans may target changes in perception and branding by the customer, client, taxpayer, or larger community. When the existing business is to assume a major change or when planning a new venture, a 3 to 5 year business plan is required, since investors will look for their investment return in that timeframe.

Audience

Business plans may be internally or externally focused. Externally focused plans target goals that are important to external stakeholders, particularly financial stakeholders. They typically have detailed information about the organization or team attempting to reach the goals. With for-profit entities, external stakeholders include investors and customers. External stake-holders of non-profits include donors and the clients of the non-profit’s services. For government agencies, external stakeholders include tax-payers, higher-level government agencies, and international lending bodies such as the International Monetary Fund, the World Bank, various economic agencies of the United Nations, and development banks.

Internally focused business plans target intermediate goals required to reach the external goals. They may cover the development of a new product, a new service, a new IT system, a restructuring of finance, the refurbishing of a factory or a restructuring of the organization. An internal business plan is often developed in conjunction with a balanced scorecard or a list of critical success factors. This allows success of the plan to be measured using non-financial measures. Business plans that identify and target internal goals, but provide only general guidance on how they will be met are called strategic plans.

Operational plans describe the goals of an internal organization, working group or department. Project plans, sometimes known as project frameworks, describe the goals of a particular project. They may also address the project’s place within the organization’s larger strategic goals.

Content

Business plans are decision-making tools. The content and format of the business plan is determined by the goals and audience. For example, a business plan for a non-profit might discuss the fit between the business plan and the organization’s mission. Banks are quite concerned about defaults, so a business plan for a bank loan will build a convincing case for the organization’s ability to repay the loan. Venture capitalists are primarily concerned about initial investment, feasibility, and exit valuation. A business plan for a project requiring equity financing will need to explain why current resources, upcoming growth opportunities, and sustainable competitive advantage will lead to a high exit valuation.[citation needed]

Preparing a business plan draws on a wide range of knowledge from many different business disciplines: finance, human resource management, intellectual property management, supply chain management, operations management, and marketing, among others. It can be helpful to view the business plan as a collection of sub-plans, one for each of the main business disciplines.

“… a good business plan can help to make a good business credible, understandable, and attractive to someone who is unfamiliar with the business. Writing a good business plan can’t guarantee success, but it can go a long way toward reducing the odds of failure.”

Presentation

The format of a business plan depends on its presentation context. It is common for businesses, especially start-ups, to have three or four formats for the same business plan.

An “elevator pitch” is a short summary of the plan’s executive summary. This is often used as a teaser to awaken the interest of potential investors, customers, or strategic partners. It is called an elevator pitch as it is supposed to be content that can be explained to someone else quickly in an elevator. The elevator pitch should be between 30 and 60 seconds.

A pitch deck is a slide show and oral presentation that is meant to trigger discussion and interest potential investors in reading the written presentation. The content of the presentation is usually limited to the executive summary and a few key graphs showing financial trends and key decision making benchmarks. If a new product is being proposed and time permits, a demonstration of the product may be included.

A written presentation for external stakeholders is a detailed, well written, and pleasingly formatted plan targeted at external stakeholders.

An internal operational plan is a detailed plan describing planning details that are needed by management but may not be of interest to external stakeholders. Such plans have a somewhat higher degree of candor and informality than the version targeted at external stakeholders and others.

Typical structure for a business plan for a start up venture:

  •  cover page and table of contents
  • executive summary
  • mission statement
  • business description
  • business environment analysis
  • SWOT analysis
  •  industry background
  •  competitor analysis
  • market analysis
  • marketing plan
  • operations plan
  • management summary
  • financial plan attachments and milestones

Typical questions addressed by a business plan for a start up venture:

  •  What problem does the company’s product or service solve? What niche will it fill?
  • What is the company’s solution to the problem?
  •   Who are the company’s customers, and how will the company market and sell its products to them?
  • What is the size of the market for this solution?
  •   What is the business model for the business (how will it make money)?
  • Who are the competitors and how will the company maintain a competitive advantage?
  •   How does the company plan to manage its operations as it grows?
  •   Who will run the company and what makes them qualified to do so?
  • What are the risks and threats confronting the business, and what can be done to mitigate them?
  •   What are the company’s capital and resource requirements?
  •    What are the company’s historical and projected financial statements?

Revising the business plan

Cost overruns and revenue shortfalls

Cost and revenue estimates are central to any business plan for deciding the viability of the planned venture. But costs are often underestimated and revenues overestimated resulting in later cost overruns, revenue shortfalls, and possibly non-viability. During the dot-com bubble 1997-2001 this was a problem for many technology start-ups. Reference class forecasting has been developed to reduce the risks of cost overruns and revenue shortfalls and thus generate more accurate business plans.

Legal and liability issues

Disclosure requirements

An externally targeted business plan should list all legal concerns and financial liabilities that might negatively affect investors. Depending on the amount of funds being raised and the audience to whom the plan is presented, failure to do this may have severe legal consequences.

THE IMPORTANCE OF MARKETING FOR THE SUCCESS OF A BUSINESS

The heart of your business success lies in its marketing. Most aspects of your business depend on successful marketing. The overall marketing umbrella covers advertising, public relations, promotions and sales. Marketing is a process by which a product or service is introduced and promoted to potential customers. Without marketing, your business may offer the best products or services in your industry, but none of your potential customers would know about it. Without marketing, sales may crash and companies may have to close.

Getting Word Out:

For a business to succeed, the product or service it provides must be known to potential buyers. Unless your business is known in the community and have communication with your customers readily available, you have to use marketing strategies to create product or service awareness. Without marketing, your potential customers may never be aware of your business offerings and your business may not be given the opportunity to progress and succeed. Using marketing to promote your product, service and company provides your business with a chance of being discovered by prospective customers.

Higher Sales:

Once your product, service or company gets on the radar screen of your prospects, it increases your chances that consumers will make a purchase. As awareness becomes a reality, it is also the point where new customers start to spread the word, telling friends and family about this amazing new product they discovered. Your sales will steadily increase as the word spreads. Without employing marketing strategies, these sales may not have ever happened; without sales, a company cannot succeed.

Company Reputation:

The success of a company often rests on a solid reputation. Marketing builds brand name recognition or product recall with a company. When a company reaches the high expectations of the public, its reputation stands on firmer ground. As your reputation grows, the business expands and sales increase. The reputation of your company is built through active participation in community programs, effective communication–externally and externally–and quality products or services, which are created or supported by marketing efforts.

Healthy Competition:

Marketing also fosters an environment in the marketplace for healthy completion. Marketing efforts get the word out on pricing of products and services, which not only reaches the intended consumers, but also reaches other companies competing for the consumers’ business. As opposed to companies that have a monopoly on products and services that can charge almost any price, marketing helps keep pricing competitive for a business to try to win over consumers before its competition does. Without competition, well known companies would continue to sell while lesser known companies or new companies would stand little chance of ever becoming successful. Marketing facilitates the healthy competition that allows small businesses and new businesses to be successful enter and grow in the marketplace.

Considerations:

Although marketing is hugely important for a business to succeed, it can also be very expensive. In its first year, a company might spend as much as half of its sales on marketing programs. After the first year, a marketing budget can reach as much as 30 percent–sometimes more–of the annual sales. A marketing program that gives your company the best chance is a healthy mix of different forms of marketing, such as website development, public relations, print and broadcast advertising, design and printing for all print materials, trade shows and other special events.

INTERNET MARKETING

What is Internet Marketing?

Internet Marketing also called online marketing, it is the process of promoting a brand, products or services over the Internet. Its broad scope includes email marketing, electronic customer relationship management and any promotional activities that are done via wireless media.
It also combines the technical and creative aspects of the World Wide Web such as advertising, designing, development and sales. Moreover, Internet Marketing also deals with creating and placing ads throughout the various stages of customer engagement cycle.

Online marketing is divided into different types:

Affiliate Marketing

It is a marketing practice wherein a business pays an online retailer, e-commerce site or blog for each visitor or sales that these websites make for their brand.

Display Advertising

This refers to advertisement banners that are displayed on other websites or blogs to boost traffic for their own content. This, in turn, can increase product awareness.

Email Marketing

From the name itself, this is a marketing process that involves reaching out to your customers via email.

Inbound Marketing

This type of Internet marketing involves sharing of free valuable content to your target market to convince them to become your loyal customer. This could be done by setting up a business blog.

Search Engine Marketing

This is a form of marketing that promotes a business through paid advertisement that appears on search engine result pages. This includes paid placement, contextual advertising, paid inclusion or through search engine optimization.

Search Engine Optimization

Contrary to SEM, SEO uses the unpaid and natural process of promoting content on SERPs. This includes keyword research and placement, link building and social media marketing.

Social Media Marketing

Based on its name, social media marketing is the process of promoting a website through various social networks like Facebook, Twitter, Google+, LinkedIn, Pinterest and more.

Why Internet Marketing is Important?

The Internet has the power to connect millions of people from around the world. Thus, it also has the capabilities to bring your business to millions of your target market worldwide. What makes this process a best inclusion to your promotional effort is the fact that you don’t need to shell out plenty of money.
In addition, the effectiveness of your campaign can be easily measured using web analytics and cost-volume-profit analysis tools. However, it requires you to learn the many facets of Internet marketing so that you’ll know whether your efforts are giving the return on investment that you want for your business.

MARKETING SCOPE

Important Scope of Marketing

Some of the most important scope of marketing are as follows: 1. Goods 2. Services 3. Events 4. Experiences 5. Persons 6. Places 7. Properties 8. Organizations 9. Information 10. Idea.

The scope of marketing deals with the question, ‘what is marketed?’ According to Kotler, marketing people are involved with ten types of entities.

1. Goods:

Physical goods constitute the major part of a country’s production and marketing effort. Companies market billions of food products, and millions of cars, refrigerators, television and machines.

2. Services:

As economies advance, a large proportion of their activities is focused on the pro­duction of services. Services include the work of airlines, hotels, car rental firms, beauticians, software programmers, management consultants, and so on. Many market offerings consist of a mix of goods and services. For example, a restaurant offers both goods and services.

3. Events:

Marketers promote events. Events can be trade shows, company anniversaries, entertainment award shows, local festivals, health camps, and so on. For example, global sporting events such as the Olympics or Common Wealth Games are promoted aggressively to both companies and fans.

4. Experiences:

Marketers create experiences by offering a mix of both goods and services. A product is promoted not only by communicating features but also by giving unique and interesting experiences to customers. For example, Maruti Sx4 comes with Bluetooth technology to ensure connectivity while driving, similarly residential townships offer landscaped gardens and gaming zones.

5. Persons:

Due to a rise in testimonial advertising, celebrity marketing has become a business. All popular personalities such as film stars, TV artists, and sportspersons have agents and personal managers. They also tie up with PR agencies for better marketing of oneself

6. Places:

Cities, states, regions, and countries compete to attract tourists. Today, states and coun­tries are also marketing places to factories, companies, new residents, real estate agents, banks and business associations. Place marketers are largely real estate agents and builders. They are using mega events and exhibitions to market places. The tourism ministry is also aggressively promoting tourist spots locally and globally.

7. Properties:

Properties can be categorized as real properties or financial properties. Real property is the ownership of real estates, whereas financial property relates to stocks and bonds. Properties are bought and sold through marketing.
Marketing enhances the need of ownership and creates possession utility. With improving income levels in the economy, people are seeking better ways of saving money. Financial and real property marketing need to build trust and confidence at higher levels.

8. Organizations:

Organizations actively work to build image in the minds of their target public. The PR department plays an active role in marketing an organization’s image. Marketers of the services need to build the corporate image, as exchange of services does not result in the owner­ship of anything. The organization’s goodwill promotes trust and reliability. The organization’s image also helps the companies in the smooth introduction of new products.

9. Information:

Information can be produced and marketed as a product. Educational institutions, encyclopedias, non-fiction books, specialized magazines and newspapers market information. The production, packaging, and distribution of information is a major industry. Media revolution and increased literacy levels have widened the scope of informa­tion marketing.

10. Idea:

Every market offering includes a basic idea. Products and services are used as platforms for delivering some idea or benefit. Social marketers widely promote ideas. Maruti Udyog Limited promoted safe driving habits, need to wear seat belts, need to prohibit children from sitting near the driver’s seat, and so on.

 

WAYS TO MANAGE FINANCES

Personal financial management is a subject that is not taught in many schools, but is something that nearly everyone has to deal with in their lives later on. Here are some statistics: Some 58% of Americans do not have a retirement plan in place for how they’ll manage their finances when they get old. While people generally believe they’ll need about $300,000 to support themselves in retirement, the average American has only about $25,000 saved at the time of retirement. Average household credit card debt among Americans now stands at a distressing $15,204. If these facts are alarming to you, and you want to reverse the trend, read on for specific, targeted advice geared towards giving you a better future.

Make a Budget:

 

 *For one month, keep track of all your expenses. You don’t have to limit yourself; just get an idea of what you spend money on during any given month. Save all your receipts, make note of how much cash you need versus how much you expense to credit cards, and figure out how much money you have left over when the calendar turns.

* After the first month, take stock of what you spent. Don’t write down what you wished you had spent; write down what you actually spent. Categorize your purchases in a way that makes sense to you. A simple list of your monthly expenses might look something like this:

  • Monthly income: $3,000
  • Expenses:
    • Rent/mortgage: $800
    • Household bills (utilities/electric/cable): $125
    • Groceries: $300
    • Dining out: $125
    • Gas: $100
    • Emergency medical: $200
    • Discretionary: $400
    • Savings: $900

 * Now, write down your actual budget. Based on the month of actual expenses — and your own knowledge of your spending history — budget out how much of your income you want to allocate to each category every month. If desired, use an online budgeting platform, such as Mint.com, to help you manage your budget.

  • In your budget, make separate columns for projected budget and actual budget. Your projected budget is how much you intend to spend on a category; this should stay the same from month to month and be calculated at the beginning of the month. Your actual budget is how much you end up spending; it fluctuates from month to month and is calculated at the end of the month.
  • Many people leave significant room in their budget for savings. You don’t have to structure your budget to include savings, but it’s generally thought of as a smart idea. Professional financial planners advise their clients to set aside at least 10% to 15% of their total earnings for savings.

 * Be honest with yourself about your budget. It’s your money — there’s really no sense in lying to yourself about how much you’re going to spend when making a budget. The only person you hurt when doing this is yourself. On the other hand, if you have no idea how you spend your money, your budget may take a few months to solidify. In the meantime, don’t put down any hard numbers until you can get realistic with yourself.

  • For example, if you have $500 dollars allocated to savings every month, but know that it’ll consistently be a stretch in order to meet that goal, don’t put it down. Put down a number that’s realistic. Then, go back to your budget and see if you can’t tweak it to loosen up cash somewhere else, and then funnel it into your savings.

 * Keep track of your budget over time. The hard part of a budget is that your expenses may change from month to month. The great part of a budget is that you’ll have kept track of those changes, giving you an accurate idea of where your money went during the year.

  • Setting a budget will open your eyes to how much money you spend, if they haven’t been opened already. Many people, after setting a budget, realize that they spend money on pretty petty things. This knowledge allows them to adjust their spending habits and put the money towards more meaningful areas.
  • Plan for the unexpected. Setting a budget will also teach you that you never know when you’ll have to pay for something unexpected — but that the unexpected will come to be expected. You obviously don’t plan on your car breaking down, or your child needing medical attention, but it pays to expect these contingencies to happen, and to be prepared for them financially when they come.

Spend Your Money Successfully:

  • When you can borrow/rent, don’t buy. How often have you bought a DVD only to have let it collect dust for years, without using it? Books, magazines, DVDs, tools, party supplies, and athletic equipment can all be rented for smaller amounts of money. Renting often saves you the hassle of upkeep, keeps room in your storage, and generally causes you to treat items better.

    • Don’t just rent blindly. If you use an item for long enough, it may be best to buy. Perform a simple cost analysis to see whether renting or buying is in your best interests
  •  If you have the money, pay a high down payment on your mortgage. For many people, buying a home is the most costly and significant payment they’ll ever make in their lives. For this reason, it helps to be in the know how to spend your mortgage money wisely. Your goal in paying off your mortgage should be to minimize interest payments and fees while balancing out the rest of your budget.
    • Prepay early up front. The first five to seven years of a mortgage are generally when your interest payments are going to be the highest. If you can, take your tax return and funnel a portion of it back into your mortgage. Paying off early will help increase your equity fast by lowering your interest payments.
    • See if you can’t make bi-weekly payments instead of monthly payments. Instead of making 12 payments on your mortgage in a year, see if you can’t make 26 payments on your mortgage instead. This will allow you to save thousands of dollars, provided there aren’t any fees associated with it. Some lenders charge significant fees ($300 to $400) in order to give you the privilege, and even then only apply the payment once a month.
    • Talk with your lender about refinancing. If you can refinance your loan down from 6.7% to 5.7%, for example, while still making the same payments, go for it. You could knock off years on your mortgage.
  •  Understand that owning a credit card may be very important for establishing credit. A credit score of 750 or above may unlock significantly lower interest rates and opportunities for new loans — nothing to sneeze at. Even if you rarely use the credit card, it’s important to have one. If you don’t trust yourself, just lock it in a drawer.
    • Treat your credit card like cash — that’s what it is. Some people treat their credit cards like unlimited spending devices, running up balances they know they can’t pay off and only making the minimum monthly payment. If you’re going to do this, be prepared to spend significant amounts of your money on interest payments and fees.
    • Shoot for a low credit utilization. A low credit utilization means that the debt you put on your credit card is proportionally low to your overall limit. In plain English, that means that if you have an average monthly balance of $200 on your credit card but your limit is $2,000, the ratio of your debt to your limit is very low, about 1:10. If you have an average monthly balance of $200 on your credit card but your limit is $400, your credit utilization is going to shoot through the roof, about 1:2.

 

  •  Spend what you have, not what you hope to make. You may think of yourself as a high earner, but if your money doesn’t back up that statement, you’re shooting yourself in the foot acting like you are. The first and greatest rule of spending money is this: Unless it’s an emergency, only spend money that you have, not money that you expect to make. This should keep you out of debt and planning well for the future.

Make Smart Investments:


  • Familiarize yourself with different investment options. As we grow up, we realize that the financial world out there is so much more complicated than we envisioned as children. There are literally options to trade imaginary items; there are futures to bet on things that have not yet happened; there are sophisticated bundles of stock. The more you know about financial instruments and possibilities, the better off you’ll be when it comes to investing your money, even if that wisdom consists only of knowing when to back away.
  •  Take advantage of any retirement plans that your employers offer. Often, employees can opt into a retirement 401(k) plan. In this plan, a portion of your paycheck is automatically transferred to a savings plan. This is a great way of saving, because payments come out of their paycheck before it’s cut; most people never even notice the payments.
    • Talk with your company’s HR representative about employer matching. Some larger companies with robust benefit plans will actually match the amount of money you put into your 401(k), effectively doubling your investment. So if you choose to put in $1,000 each paycheck, your company may pay an additional $1,000, making it a $2,000 investment each paycheck.
  •  If you’re going to put money into the stock market, don’t gamble with it. Many people try to day trade in the stock market, betting on small gains and losses in individual stocks every day. While this can be an effective way of making money for the seasoned individual, it’s extremely risky, and more like gambling than investing. If you want to make a safe investment in the stock market, invest for the long term. That means leaving your money invested for 10, 20, 30 years or more.
    • Look at company fundamentals (how much cash they have on hand, what their product history is, how they value their employees, and what their strategic alliances are) when choosing which stocks to invest in. You’re essentially making a bet that the current stock price is undervalued and will rise in the future.
    • For safer bets, look at mutual funds when buying stocks. Mutual funds are bundles of stocks collected together to minimize risk. Think about it like this: if you’ve invested all of your money in a single stock and the stock price plummets, you’re screwed; if you’ve invested all your money equally in 100 different stocks, many stocks can completely fail without affecting your bottom line. This is basically how mutual funds mitigate risk.
  •  Have good insurance coverage. They say that smart people expect the unexpected, and have a plan for what they’ll do just in case. You never know when you’ll need a large sum of money during an emergency. Having good insurance coverage can really help tide you over through a crisis. Talk with your family about different kinds of insurance that you can purchase to help you in the event of an emergency:
    • Life insurance (if you or a spouse unexpectedly dies)
    • Health insurance (if you have to pay for unexpected hospital and/or doctor bills)
    • Homeowner’s insurance (if something unexpected harms or destroys your home)
    • Disaster insurance (for tornadoes, earthquakes, floods, fires, etc.)
  • Think about getting a Roth IRA for retirement. In addition to, or perhaps instead of, your traditional 401(k) plan — which is usually an employee retirement plan and a little different from employer to employer— talk with a financial advisor about getting a Roth IRA. Roth IRAs are retirement plans that let you invest a certain amount of money, and extract it, tax-free, after you turn 60. (Well, technically, 59 ½.)

    • Roth IRAs are sometimes invested in securities, stocks and bonds, mutual funds, and annuities, giving them the opportunity to grow significantly over the course of many years. If you invest in an IRA early on, any compound interest you earn (interest on top of interest) can create significant increases in your investment over time.
    • Consult with an insurance advisor about guaranteed income products. This type of planning allows you to receive a guaranteed amount in retirement that recurs each year without stopping as long as you shall live. This protects you from running out of money in retirement. Sometimes these payments continue for your spouse after your passing.

     

Build Your Savings:

  • Start by putting away as much of your expendable (excess) income as possible. Make savings a priority in your life. Even if your budget is small, tweak your finances so that you save greater than 10% of your total earnings.

    • Think of it like this: If you manage to save $10,000 per year — which is less than $1,000 per month — in 15 years, you’ll have $150,000 plus interest. That’s enough money to put a kid through college today, but not tomorrow if that child has just been born. So, start saving and you may have a significant down payment for that child or for a wonderful house.
    • Start saving young. Even if you’re still in school, saving is still important. People who save well treat it more as an ethic than necessity. If you save early, and then invest that savings wisely, a small initial contribution can snowball (compound) into a significant sum. It literally pays to be forward-thinking.

 

  •  Start an emergency fund. Saving is all about frittering away expendable income. Having expendable income means not having debt. Not having debt means being prepared for emergencies. Therefore, a rainy-day fund can really help you out when it comes to saving money.
    • Think about it like this: your car breaks down and you suddenly have $2,000 in extra payments. You didn’t plan on this happening, so you have to take out a loan. Credit is tightening up, so your interest rates might be pretty high. Pretty soon, you’re paying 6 or 7 percent interest on a loan, which cuts into your ability to save for the next half-year.
      • If you had an emergency fund, you could have avoided bringing on the debt, and the associated interest rates, in the first place. Being prepared really pays.

 

  •  When you’ve started saving for retirement and put money in your emergency fund, put away three to six months’ worth of expenses. Again, saving is all about being prepared for the uncertainty of it all. If you’re unexpectedly laid off work, or your company reduces your commission, you don’t want to take on debt in order to finance your life. Setting aside three, six, or even nine months’ worth of expenses will help ensure that you’re in the clear, even if disaster strikes.
  •   Begin paying off your debt once you’re established. Whether it’s credit card debt or debt left on your mortgage, having debt can seriously cut into your ability to save. Start with debt that has the highest interest rate. (If it’s your mortgage, try paying off larger chunks of it, but focus on non-mortgage payments first.) Then, move onto your second-highest rate loan, and begin paying that off. Move down the line, in decreasing order, until you’ve paid off your entire debt load.
  •  Begin really ramping up for retirement. If you’re getting to be that age (45 or 50), and you haven’t started saving for retirement, it’s really important to start ramping up right away. Make your maximum contributions to your IRA ($5,000) and your 401(k) ($16,500) every year; if you’re older than 50, you can even make so-called catch-up contributions if you want to pad your retirement savings.
    • Put a high priority on saving money for retirement — even higher priority than saving for your children’s college education. Whereas you can always borrow money to help pay for college, you can’t borrow money to help fund retirement.
    • If you’re totally in the dark about how much money you should be saving, use an online retirement-savings calculator — Kiplinger’s has a good one here — to aid you.
    • Consult a financial planner or advisor. If you want to maximize your retirement savings because you have no clue how to start, talk with a licensed professional planner. Planners are trained to invest your money wisely, and usually have a track record of return on investment (ROI). On the one hand, you’ll have to pay for their services; on the other hand, you’re paying them to make you money. Not a bad deal.

Trade Fair In Ruins

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The Ghana Trade Fair Centre, which used to be a centre of attraction and convergence for trading activities among the business community, both local and international, is now a pale shadow of itself.

The centre, built over four decades ago as a magnificent edifice meant to host major local and international fairs, is now in ruins, a situation which makes it unattractive and unsafe to host any major fair or exhibition.With the exception of pavilions A and B, as well as the Mobile Pavilion and the one housing the offices of the Ghana Trade Fair Company (GTFC), operators of the centre, the other facilities at the centre have been overtaken by weeds, making them  good havens for reptiles.

During a visit  to the centre last weekend and early this week, the Daily Graphic observed that the famous Round Pavilion, which used to attract many visitors during trade fairs, was in bad shape.

The roof of the pavilion had been ripped off, while the Entertainment Centre behind the Round Pavilion was overgrown with weeds.

Apart from a few institutions, such as the Ghana National Chamber of Commerce and Industry, the Federation of Ghanaian Exporters (FAGE) and other companies, which have permanent shops and stores there, there is nothing to write home about the centre.

The centre is vibrant during the weekends, as event organisers use some of the facilities to hold their programmes, such as church services, political rallies and other social events.

The GTFC has also decided to hire out the wings of Pavilion A to private individuals to use as stores, but an official told the Daily Graphic that “per our agreement, anytime we are organising a fair, such individuals either have to vacate for the fair to take place or pay the required amount in order to participate as exhibitors”.

Background

Ghana’s first President, Dr Kwame Nkrumah, established the centre exactly 50 years ago as part of an industrialisation programme to expand the country’s international trade, especially in Africa.

From being a department under the Ministry of Trade and Industry to an authority, the company was converted into a limited liability and christened the Ghana Trade Fair Company Limited. It was incorporated under the Statutory Corporations (Conversion to Companies) Act 1993, Act 461 in April 1997.

The centre had the vision to become the preferred international trade fair centre in the sub-region to promote beneficial trade between Ghana and its g

pava

lobal trading partners but it has not received much support from successive governments, while its facilities continue to deteriorate.

The mission of the centre is: “To organise world-class fairs and exhibitions. To be the prime institution for business trade facilitation in Ghana and to promote business exposure by creating match-making opportunities for Ghanaian businesses and their counterparts abroad”.

Lieutenant General J. A. Ankrah, who was the Head of State after the 1966 coup, which overthrew Dr Nkrumah officially opened the First International Trade Fair on February 1, 1967, with a total of 17 foreign countries, seven African as well as over 40 Ghanaian industries participating. The second and third fairs came off in 1971 and 1975 respectively.

 

Other fairs

After that there was a lull as the Trade Fair Centre was left to deteriorate. When the PNDC took over in 1981, it put in place strategies as part of the Economic Recovery Programme (ERP), which included the revival of local businesses.

Thus, in 1985, a group of local business people in the worrd and furniture sector, agreed to organise a fair and they sought the government’s assistance to rehabilitate the Trade Fair Centre.

This led to the hosting of the Ghana International Furniture and Woodworking Industry Exhibition (GIFEX), an annual exhibition to highlight activities of the furniture and woodworking industry in the country.

It openmed the flood gate for other fairs such as the Ghana Industry and Technology Exhibition, (INDUTECH) in 1987, the ECOWAS Fair, Grand Sales, the GREDA Housing Fair and Tourism Fair among other such shows.

The initiative by the private sector opened up the Trade Fair Centre for various kinds of businesses including trade shows, tradein all kinds of merchandise on an annual basis.

Every year, the trade fairs attracted business people and visitors to the centre to transact businesses and have fund.

Fond memories

Proffering reasons for the woes of the centre, the Chief Executive Officer of the GTFC, Dr Erasmus Koney, recalled with fond memories how the centre used to be.

“In times of old, the trade fair centre was a very vibrant place for everybody, including me. I have fond memories of what trade fairs used to be.

“In those days, the mission was to showcase Ghana as having arrived. The several industries that had sprung up in Ghana were to showcase their products here to other African countries and the whole world that Ghana was progressing,” he explained.

He, however, said with the springing up of a number of shopping malls within the country, especially in Accra, it was no more exciting for people to wait until the company organised its international fair or grand sales before they could come and buy things.

“With the establishment of various shopping malls, people do not have to wait for two weeks in a year to come here. For 365 days in the year you can visit any of the malls and you can get whatever you want,” Dr Koney explained.

He also blamed local industries for failing to patronise the centre’s fairs.

Dr Koney said currently when the company organised fairs and exhibitions, majority of the participants were always those in the tie & dye, beads and beads products as well as carving business.

 

Changes

Recalling what led to the conversion into a limited liability, he said in the 1992 Constitution, it was suggested that the centre, which was a department under the Ministry of Trade and Industry, be changed into an authority and later into a company.

He said a committee was set up to look into the viability of that suggestion and it came up with recommendations, among which was for the government to invest ¢919 million and $84 million to recapitalise the centre.

“But not a single cedi was sent here to recapitalise the centre. With trade fair now a company, it has been taken off government subvention and the workers are now required to work and pay themselves.

“After some time, the dilapidated nature of the buildings was such that it did not become attractive to event organisers and so they did not want to come here. They rather went to the Accra International Conference Centre (AICC),” he explained.

Dr Koney recalled that in February 2016, the government requested investors to bid to transform the centre, with Pricewaterhouse Coopers serving as advisers.

He said 10 companies were shortlisted and after an evaluation, five were chosen, out of which one was selected.

Dr Koney said currently the company was awaiting what the current government would say concerning what the previous government had initiated.

Current government

Explaining why the grounds of the centre were weedy, he said the board ordered that the cleaners and others janitors offering services be sacked, leaving only one because the centre could not pay for their services.

Dr Koney said the company was now working feverishly to host the Ghana@60 International Trade Fair slated from March 2 to 7, 2017 to coincide with the Ghana@60 celebrations.

He said the company was renovating pavilions A and B, as well as the Mobile Pavilion, and their wings to host the upcoming fair.

Dr Koney was convinced that with an injection of funds, the centre could bounce back to live, adding that after the upcoming fair, the centre would begin to transform.

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 The fountain at the Trade Fair Centre is now out of use

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