Doing Business in Sri Lanka, profitable and enjoyable

Sri Lanka is a vibrant country located in South Asia, a region that is home to about 1,590 million people living in most populous and most densely populated part of the entire world. In terms of population Sri Lanka ranks about fifth but in terms of doing business it is ranked second in South Asia. As a gateway to South Asia, Sri Lanka offers unique business opportunities to businessmen and investors.

There are seven countries in South Asia: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. The population in Sri Lanka is about 20 million earning an average per capita income of U S $ 2,290/-. Classified as Lower-Middle Income earner, Sri Lanka ranks as the second most business friendly country after Maldives, in the recent annual survey by the World Bank. Titled “Doing business 2012 Sri Lanka” the annual publication compares data out of all seven countries in the region. The score by Sri Lanka at 89 points bode well when compared with the average Regional score of 117. Besides doing business as a whole has improved from the previous figure of 98 recorded in 2011. The survey deals with the following matters in depth: starting business, construction and property, utility such as electricity, obtaining finance, investment protection, taxation, international trading, commercial contracts etc.

Starting and running a business in this country is not only rewarding to businessmen and investors but most enjoyable to them and to their families. There is an attractive resident scheme for investors to start business and live in the country during the pendency of the business. If by any chance the investors wish to dispose the business, they can continue to reside in the country, unlike in the case of Singapore.

As a gateway to South Asia, Sri Lanka and its main ports in Colombo, Hambanthota and Trincomalee offer the state of the art technology in port management. Air freighting is facilitated via Katunayake and other regional airports. Colombo the capital city is a commercial hub for imports and exports to the entire South Asian region. Businesses can be located either in Free Trade Zones or elsewhere without much difficulty.

Heavy and light industry, construction, education, leisure, pharmaceuticals, plantation, agriculture and farming, entertainment, media, healthcare, fashions are key sectors showing great promise along with financial services including commercial banking, credit, stockbroking, asset management, investment and private banking.

Business Opportunity

Inquiries are welcome from prospective businessmen, buyers, developers and investors who wish to start a new business or buy an existing one. Get a piece of action in Colombo Business Centre that has morphed into a star performer in the region. You can recoup your investment in business within a short horizon depending on the market movements. More than that, you will enjoy doing business here, really.

Muthu Ashraff

Business Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Land for Ecotourism in Maho, Sri Lanka

A once in life time opportunity knocks on your door in the form of a prime land that can be developed as Ecotourism Rest or Eco Lodge in the scenic town of Maho in North-West Sri Lanka.

This prime real estate spawns an area about 19.86 Hectares (about 49.7 Acres). It is situated at Hevanala Yaya, Thalangedara, Maho in Kurunegala District of North-Western Province of Sri Lanka. It borders Nikaweratiya - Madagala Road with a road frontage of around 900 meters. Trains operated by Ceylon Government Railway saunter in the southern edge of the land traversing towards Trincomalee and Batticaloa, towns that are located in the Eastern sea shore. In fact this land is in between two railway stations: one is Maho and the other is Yapahuwa.

The historic city of Yapahuwa was once the capital of Sri Lanka during the 13 Century. Tourists flock to the city in their thousands to view the olden city and centres of tourist attraction such as Kikawala Rock Cave Temple that displays evidence of amazing volcanic rock formations. You can easily access the land travelling from Colombo, Capital of Sri Lanka over fully carpeted road that reaches the land and far beyond. From Colombo you travel 160 km to this picturesque land.

The land is endowed with varieties of well grown fruit trees such as coconut, mango, cashew, wood apple, banana and many others. Moreover it is forested with about 650 teak trees of about 6 years old planted along the boundaries. A meandering and beautiful landscape connects you to rock formations, scrub jungle and a cosy environment of lush greenery. Ground water is available throughout the year in three large ponds that collect rain water. Additionally, two large agro wells provide irrigational water during summer and two wells sprinkle drinking water throughout the year. Existing building structures include a two-bedroom bungalow, two small houses, an office as well as a guard room. There is a weigh bridge currently not in use but serviceable.

Ecotourism

Surrounded by tropical greenery, this property has potential to be developed as an iconic Eco-friendly Tourist Rest or Eco Lodge. One of the norms of Ecotourism stipulated by “The Ecotourism Society” is that places under Ecotourism banner must conserve the environment and at the same time must improve the welfare of the people living in and around the area. This land definitely passes the test of “conserve and improve” concept and qualifies as a prime spot for development as Ecotourism Rest or Eco Lodge. Finance for Ecotourism is generally granted by local and international banks.

Business Opportunity

1. A prospective investor has to buy this land in the first place and thereafter, set in motion a chosen Ecotourism Rest or Eco Lodge construction programme

2. A prospective buyer can buy this land and hold it as an investment asset before re-selling it to any prospective developer bent on these lines.

Inquiries are welcome from prospective buyers, investors or Ecotourism property developers for a price quote. Get a piece of action in buying this plot of land in Maho , North-Western Province of Sri Lanka and experience the real pleasure of being part of ecology.

Muthu Ashraff

Business Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Land in Nallur, Jaffna for Development

A large plot of land is available in Nallur, Jaffna for property development. This plot of land can be converted into a mixed development consisting of residential apartments, theme park, offices and shops.

This land is of almost rectangular shape with an extent of 3,687 square meters. In Jaffna parlance the extent is stated as 14.35 Parappu. Located in the Point Pedro Road , the land can be easily accessed travelling from Nallur Kandasamy Kovil towards Point Pedro. Passing Sankilian Road Junction the plot of land is for your view on your right side. The entire length of the land is abutting the Jaffna - Point Pedro Road. Originally this land was part of Sankilithoppu. Nowadays it is referred to as Pandarathottam due to the fact that it faces Pandarakulam across the road.

Business Opportunity

1. A prospective investor has to buy this land in the first place and thereafter, set in motion a chosen development programme. Most banks are willing to finance such real estate development

2. A prospective buyer can buy this land and hold it as an investment asset before re-selling it to any prospective property developer later on.

Inquiries are welcome from prospective buyers, investors or property developers for a price quote. Get a piece of action in buying this plot of land in Jaffna which is poised to experience large scale economic and infra-structure development in the near future.

Muthu Ashraff

Business Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Colombo is gearing up for Private Banking

Huge potential for private banking cannot be dismissed in Colombo, Sri Lanka. Accumulation of wealth in the hands of the top echelon has given added fillip for the need of specialised services such as private banking.

Private banking deals with financial advice and management of money, investment and assets belonging to high net worth clients (HNTC). These clients may be wealthy individuals or big corporates. In the case of individuals private banking plays purely the role of wealth manager. A private banker to a HNTC provides advisory and management of wealth including trust services. These trust services include wills and inheritance, pensions, taxation, and advising and managing of charity and donations. Corporates, on the other hand do not require these services as they have departments within their corporate office to deal with these discreet matters. Both individuals and corporates look for common private banking services including money management, investment management and asset management along with financial advisory. They also seek estate management dealing with management of lands and real estate, custodial services dealing with scripts and bonds and funds transmission domestically or as cross border facility. Few customers might require emergency or bridging finance on fully secured basis. Some of the large private bankers such as Coutts of UK and Northern Trust Corporation of USA provide every conceivable service under the banner of private banking.

Private banking thrives in countries that have financial centres, commercial hubs and industrial zones. Moreover, private banking is in demand where accumulation of capital is so much skewed that only a minor percentage of population possesses immense wealth.

Colombo as financial centre of Sri Lanka is fast becoming a business, financial, commercial and industrial centre. Almost all the HNTCs have offices or residences within the municipal limits of Colombo.

Business Opportunity

1. Existing private bankers can open a branch or window in Colombo to share in the growth momentum taking place

1. Corporates or wealthy individuals can team up to establish a new private banking office in Colombo to get plum and juicy clients, who are wealth boomers but hitherto not exposed to sophistications of private banking but are willing to be on board nonetheless

Inquiries are welcome from prospective bankers, corporates or wealthy individuals who wish to either open a branch/window or form a brand new private banking office. Get a piece of action in private banking in Colombo Financial Centre.

Muthu Ashraff

Business Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Invest in Asset Management Companies in Colombo

Asset Management is a thriving business in Colombo Financial Centre. You can invest in the equity capital of an asset management company without much hassle. Your investment can be recouped within a short horizon.

There are 18 asset management companies registered with the Securities Exchange Commission of Sri Lanka (SEC). These companies are broadly grouped under Market Intermediaries and named as “Investment Companies”. These companies are permitted to handle investment management, investment advisory and associated activities. Investment management is where the company manages client funds on a discretionary basis. The asset manager makes up his own decisions in investing in stocks and bonds in accordance with an agreed investment strategy but without reference to the client. Investment advisory on the other hand enjoins non-discretionary management where the asset manager is permitted to advise his client and on consent being received he can invest in the recommended stocks and bonds.

All these asset management companies have two types of funds: One relates to own capital funds contributed by the owners by way of equity. Another much large pool of funds relate to the clients’ money which is also referred to as portfolio management be it discretionary or non-discretionary. Generally the percentage of own funds ranges between 5 to 10 % of the invested funds. Portfolio funds form the bulk of invested funds. The 18 asset management companies manage close upon one Billion U S $ in their portfolio funds.

These companies take the worry of financial affairs out of the clients unto themselves. They use professional skills in managing funds belonging to clients, who may be individuals or institutions, big or small, domestic or foreign. They manage a wide ranging portfolio of investments, in equities, fixed income or convertibles (debt that can be converted into equity). They tend to analyse investment needs of clients and structure a portfolio strategy that translates into a perfect match for clients risk/return profile. For example, in the case of a risk-averse client, the portfolio will have more fixed income: i.e. Treasury Bills and Treasury Bonds while for a risk-taking client more weight will be given to high growth equities. It must be emphasized that the investment strategy is formulated by asset manager only after consultation with clients and after obtaining their agreement to this effect. Investments made by asset manager would be in accordance with the agreed strategy and none else.

Business Opportunity

1. You can invest in the equity capital of existing asset management companies

2. You can also obtain approval as asset management company from the SEC; for this purpose you can use companies that are already floated but await capitalization from you

Inquiries are welcome from prospective investors who wish to have a piece of action in Colombo Financial Centre a star performer in the region. You can recoup your investment in equity capital of asset management companies within a short horizon depending on the market movements.

Muthu Ashraff

Business Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

How to Value Business before Buying it?

When a seller quotes a price for his business it is known as “Ask price”. In response a buyer offers his price; this is known as “Bid Price”. After negotiation both parties agree at a price to close the deal. In order to make a bid price a buyer must do a valuation of the business he is interested in. There are six methods of valuing a business before buying it:

1. Asset Value: This is the easiest method in valuing a business. Underlying assumption in this method is that the business is a going concern. You tally all assets tangible and intangibles, fixed and current to get the total value. In the case of fixed assets either you can take the value net of associated depreciation or on replacement value basis. Current assets are appraised generally on realizable amount basis. Intangibles such as goodwill can be re-estimated. From the total assets value you must deduct outside liabilities to arrive at net value of assets in a business. Although the method is a popular one, it lacks credence as it does not take the capacity of the assets to generate income in the future, which is more meaningful to the buyer than just jotting up assets. Moreover, small businesses as well as service providers are very lean on assets but fat on earnings. Hence, asset value may not be representative for these businesses. On the other side of the coin, large scale industry is asset rich but whether they generate adequate returns on assets employed is a moot point

2. Liquidation Value: In contrast to the asset value which is based on going concern, liquidation value takes the business on the footing that it is a gone concern. Liquidation can take place in two ways: orderly or forced. An orderly liquidation takes time and the value cannot be estimated in a brush stroke. Forced sale can take place in near term and it is possible to tug in on likely price. Whichever the manner of disposal, you should ensure that the assets are valued at realizable value net of any expenses connected thereto

3. Earnings Multiple: Since buyers are more concerned with what they can get from using assets, earnings multiple as a method of valuation is used widely in business buying transactions. Generally after tax earnings is considered as the bench mark figure in this type of valuation. You take 3 to 4 years of after tax revenue and average it. Thereafter, you can multiply the figure with number of years purchase. If the average after tax earnings is US$ 100,000/- and the multiple you are conceding is 6 times then the bid price is parked at US@ 600,000/- Earnings multiple method suits well in retailing, wholesaling and medium to large businesses. It is important that you use earnings multiple where the existing business is low geared, that is, it does not use much of borrowed funds. Additionally, you must ensure that depreciation charge in the business is not heavily loaded. A litmus test to opt for this method is to compare the cash-flow with earnings-flow. If there is no substantial difference between these you can choose earnings multiple; otherwise select capitalizing cash-flow method discussed below

4. Capitalizing Cash-flow: Cash-flow is different from earnings in that it ignores accrual accounting concept and non-cash expenditure. It pitches straight on rendering of inflow, outflow and the resulting net flow. Your net cash-flow is what remains in your hands when everything was said and done. There are two ways of arriving at cash-flow for valuation purposes:

4.1. Net-flow + Depreciation

4.2 Net-flow + Interest + Tax + Depreciation (Alternatively known as “EBIT+D” which means Earnings before interest, tax and depreciation)

Once you arrive at a figure under any of the above two methods, you can capitalize cash-flow by using a capitalization ratio chosen by you. Let us assume that, the cash-flow is US $ 150,000/- capitalization rate is 20 % then you can work out the business value as:

US $ 150,000 divide by 20 and multiply by 100 equal to US $ 750,000/-

5. Market Value: Alternatively known as Rule of Thumb or Comparable Business, this method focuses on the market and how it responds to the value proposition of a particular business. You can determine market value in a number of ways. One way is to find out the sum in which similar business was sold and take that as the market value. Another method is to search in the business press for similar transaction that took place during the last 3 months. Yet another method is to estimate the amount the market can bear and after making suitable adjustments treat that as bid price

6. Cosmic Value: At the end of the day, what matters to you most, is the cosmic valuation of the business you intend to buy. Every business has cosmics surrounding it. You have to evaluate the business, its assets, its name, its logo, its customers and its process to arrive at its cosmic valuation. Afterwards you must assess whether incoming business with associated cosmics would enhance your wellbeing or retard it. Many decisions made without considering the critical role of cosmics end in bad note. Why should you have a millstone round your neck?

Muthu Ashraff

Business Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Questions Buyer must ask Seller of Business

Imagine you are meeting a seller of business today, what is the first question you will ask him. Oh yes, “what is the price” is the one you on your lips even before you settle down for a talk. This puts the seller in straitjacket, resulting in bad cosmics between you and him. Sellers are miffed over why buyers do not ask a whole heap of questions about his business and how he is going about. Here is my checklist of questions buyer must ask seller of business and in that order.

1. How the market operates? Get the broad picture initially by learning about the market place of the business, how its product is facing up competition. Get the competitor profile, growth rate in the market and whether the business is beating the market or just following it. You can also find out latest market trends

2. Who are customers & suppliers? Ask the buyer to talk about his customers and suppliers. Some of them may be known to you. It is better to dwell little more time here not least because you want lot of names but to assess how critical they are, in terms of volume and value. Also you must ask buyer about credit terms offered and obtained. Will these terms continue to be in force once the business change hands is yet another clarification you need

3. Who is the staff? Number of staff, the gross emoluments and their experience should engage your attention. Key members and how important they are is also a relevant question. Will the staff be happy to get a new owner? Ostensibly, their cooperation is vital for the sale and transition to new owner. Staff is, in essence, in every business which is of course not saying a lot

4. What is the Bottom line? By now you have got a feel of the business. But one caution: do not fall in love with the business on first sight. Ask seller to trot out numbers in profit and cash flow. Look at the profit; look more on the cash generation. When buyer gives you copies of last 3 years financials pore your eyes over the bottom line

5. External relationship: You can chat with him in ease on the question of his relationship with bankers, revenue and other government departments. There is, as must be expected, marked reluctance on the part of seller to talk about these. Still you must be very diplomatic and see whether any of the relationship is strained

6. What he is selling? Let us be very clear about what he is, in fact selling. You are passing half-way mark now and you get him to tell what is up for sale and what is not. Generally a sale of business involves name, operational assets, working capital, and human resource and so on. You must be clear whether present loan outstanding is to be transferred to you or the seller would extinguish it. Another moot point is the real estate, which may or may not be transferred. In case of lease property, you have to ask him whether it is a transferable one. If the business is located in a supermarket, you should ask about the transfer of legal right to you. In sum, you have to clear legal and administrative issues before you proceed further

7. Prospects after you buy: This is putting the seller in your shoes. After you buy his business what happens to it. How sales, operations, profit, finance will be played out?
How quickly you will go through the learning curve in running the business. How this downtime can be minimized? In as much as you love to get answers to these questions about your running business, seller would tend to be reticent and if egged he would be very brief. You must watch his reaction sharply for any nuances that indicate the business is made only for him and after him it is deluge. In other words you are made a sucker, really

8. Will seller be on board? After the sale is done will he continue to be in the board for a limited period is a follow-up question? At the prompt of any negative answer from him you must conclude your discussion and walk out. A seller must be responsible for what he has vouched all these times and in turn assure you his support. He has to introduce you to staff and outsiders; he has to guide and counsel you. If he is going to vanish on the following day you would better drop this matter

9. Wii seller arrange part-finance of the sale price? This is where seller’s external relationship especially with bankers matters. If the seller is an acceptable person he would be able to arrange part-finance of sale consideration through his own bankers or perhaps financiers known to him

10. Why he is selling? If everything is neat and fine, why the guy is selling his business. Most sellers will cite that they are retiring. Some like to take a long vacation or move out to another state or country. Chronic illness or health issues could be a reason. Sometimes they are selling to settle their children or fulfil a divorce settlement. If the seller is vague in answering this question it must put you on guard

11. What is the price? Instead of wrangling price at the first blush, you ask it as the penultimate question. Definitely his price has padding: he must have added lot of goodwill. Most sellers are too emotionally attached to the business they want a hefty price. Or perhaps this is the only cash earner for him. Whatever the reason behind him inflating the ask price, you must keep your powder dry. Do not say bluntly that the price is too much. Ask him how far he is ready to negotiate so that a matter can be closed in due course

12. How do we take it forward? Never leave the seller without getting his idea about how you and seller take the matter further. He would have his suggestions; listen to these and speak your mind loud. Do not leave with a bland “will let you know”. Go positive and say “let us proceed together”.

The above checklist reflects cosmic arrangement of twelve questions that elicit the right response on which you can make sound decision on buying a business.

Good luck!

Muthu Ashraff

Business Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

How to Restore Business Confidence?

Business confidence reflects the combined idea of the consumers and producers at a given time. Sometimes referred to as business sentiments it could move upward, downward or remain same. Generally we trace sentiments from one point of time to another. A positive upward spiral of business confidence with seasonal correction is always welcome. When business sentiments dip in downward spiral it is a definite cause for worry to business. Let me give you a step-by-step guide how to restore business confidence during such an eventuality:

1. Survey: Firstly, you survey confidence of the economy follow with an assessment of your industry and then finish with what you feel about your own business. Sentiments in economy may be down; your industry confidence may be mutes; still you may feel that your business can weather the storm

2. Bring Pressure: Talk to your industry association and urge them to take necessary steps in industry wide and coerce them to take up the matter with the government to do appropriate policy measures such as effecting tax cuts, enhancing public spending, adjusting interest rate mechanism and relaxing credit regulations

3. Do Internal Self-test: A review of business policies currently in force is the starting point for the internal self- examination. Business policy is all pervading term covering operations, marketing, human resource management etc. While doing this self-test you must see whether you need a structural change internally or just make few cosmetic changes. A complete revamp of a product is a structural change; giving a bit of face-lift in packaging is a cosmetic one.

4. Get External Feedback: Ask your customers. Your customer feedback tells you more about your business than what you already know. You can do a sit-in chat with your main customers who have reduced purchases and a telephone survey with others who have dropped out or buy marginally

5. Readying New Blue-print: Once you have completed both internal and external appraisal you can make a comprehensive survival kit to stay afloat during the do0wnward spiral of business sentiments and then to shore-up confidence levels higher. In this process you have to do touch-up on cost-cutting, hiring employees, investing and finally marketing

6. Review Cost-Cutting: Faced with a scenario of falling sentiments business gives a knee jerk reaction by cutting cost across the board. Most pronounced cut-back is seen in the operational area. You know cutting cost is a two way knife; it can reduce losses and at the same time it shuns business growth. You should use a selective cost cutting if at all one is needed

7. Hiring more than Firing: I know a company which is 180 years old that recruited maintenance staff during high tide of recession. While others were laced with anxiety started firing employees, the company showed glint of steel. Before long the company reaped its dividends with loyal staff and a fat profit. Undoubtedly, the company beat the downing sentiments with bold measures.

8. Invest more: Never think any depression is a prolonged affair. If you stand and wait for good times you will lose the opportunity to break-out. Throw that going in goosestep with your colleagues in the industry. Develop a good grasp of the ground and start investing selectively in operational assets that could turn the corner in quick time.

9. Do Re-marketing: Take measures to set your marketing in sprite. Re-define the customer base, expand where necessary and constrain where needed. Your new look product might have undergone a revamp or facelift as the case may be. By the look of it you know your product is a winner even in the difficult times

10. Network: Nothing works without network. Engage in full time business networking. Meet up industry colleagues, customers, supply creditors, press, and advertisement guys and add spice to the mix by getting your staff to personal promotion of your product and business

11. Bring in Cosmics: Finally, understand and evaluate your own cosmics. Your sentiments, feelings, your ideas are all shaped and influenced by cosmics that reside within you, perhaps un-known to you. Sooner rather than later you will realize the power of cosmics in restoring your own confidence. In turn, you would have contributed your mite in restoring business confidence in the country, really.

Muthu Ashraff

Business Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

 

If you are in Debt avoid Depression

Spiralling debt brings disappointment, despondency and depression to debtors who never controlled their lives let alone their finance. On the throes of depression is the red line. If depression is not managed, then it leads to fatal consequence. Here is the maxim: If you are in debt, avoid depression.

Debt burden has escalated in the last decade to phenomenal levels, unduly aided by advertisements by credit card issuers and personal finance providers, consumers ratcheted up the borrowings. When the crash came it not only dragged the borrowers low but pulled down the debt providers. Against the backdrop of teetering economy corporates corked off new hiring or at worst began retrench existing staff. Falling income on one side and loss of employment on the other side have trammelled consumers. Business persons are not spared either. They saw to their horror their order book trouncing downwards. Worst affected are the micro and small businesses. Like fall of dominoes, businessmen, consumers and borrowers were stumbled with disappointment, frustration and despondency. Unchecked it ended up in depression. Suicidal tendency was raising its head.

Depression leading to death

Depression as a cause of suicide is now firmly established. During the recession period 2007 to 2009 more than nine countries reported increased rates of suicide due mainly to financial woes. Feeling the sting more, was Greece that recorded a whopping 16% jump in the suicide rate. Ireland followed on heels with a staggering 13 % pike in suicide rates. Britain, though not ostensibly affected could not salvage itself. Recording 8 % rise in suicide rates; Britain tallied 5706 people killing themselves in 2008 many of them cursing debt for their plight.

Does this mean everyone who has loans burden is affected in similar manner? Analysts say that the effect of debt burden on borrowers is asymmetrical. There are no worry characters, which have sufficient asset base and least worried about debt. More than that, they generally flaunt positive attitude towards obtaining and paying out debt. The reckless borrowers on the other hand may not have asset base, but consider more the loans it is merrier. On the middle we have consumers who borrow over the limit considering it as fashion or way of life.

Worry kills

On the other side of the coin are people who are inordinately worried about loans. Most of them are either fixed income earners or enjoy luxury life erstwhile, but were short on disposable assets. A salutary feature in them is that, they get the blame game end with them; in sum, they are justifiably worried about outstanding debt. From this point onwards, we see quick slide towards depression. There is a saying: Why worry kills more people than work because more people worry than work. This comes true as people worry more about their debt. About 11 % of British citizens consider debt as the biggest worry affecting their quality of life. In the case of people who have health issues or suffer from chronic disease, the trepidation is marked. They lose weight and sleep and before long appear mere shadow of their former selves. Worry also targets those who are dependent on drugs or alcohol driving them more towards these. Another casualty is the ones who are light hearted. When they receive notification from their credit card issuers that their file is now transferred to collection departments they get jittery. A follow-up communication that the file is now with third party collector sends shiver through their spines, leading to intermittent bouts of depression.

Seeking remedy

Not everyone acknowledges going through low. Many hide it and implode one day by taking their lives out. Out of others who realize nearly 80 % do not take counter-measures and lurch towards the danger zone in matter of weeks if not days. The fortunate ones re-examine their affairs. They follow three track policies to take them out of the mire.

1. Consult medical professional in treating symptoms of low feeling to get back to proper health

2. Seek advice in arranging creditor meeting, re-scheduling loans and recovery finance to turn the corner

3. Obtain counsel in understanding and evaluating your cosmics, so that you can once again make your cosmics work for you. Cosmics are aspects residing within you generally go un-noticed. Once you know your cosmics well you can manage debt and the resulting depression better.

Muthu Ashraff

Business Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Whatever happened to Personal Finance?

No doubt, personal finance had seen a major dip in 2011. When you analyse the performance of chief areas of personal finance namely, mortgage, car finance and credit cards, a glaring trend pops up. Consumers are shunning mortgage and car finance and banking on credit cards. Instead of accumulating assets consumers have jacked up credit card expenses. Whatever happened…..?

There is an adage; when the going gets tough, the tough gets going. As we see a big reverse in personal finance in 2011 consumers instead of being tough on pruning expenses have gone soft on expense loading. Spending via credit cards has notched up in many countries. Britain experienced a staggering 35 % growth in credit card outstanding compared to the previous year. Conversely the number of people using credit cards rose marginally by about a percentage and clocked at 12 Million. In America the outstanding skyrocketed to U S $ 65 billion, a hefty US $ 20 Billion more than the figure for 2010. There again the number of users remained almost stagnant.

In comparison, mortgage finance pales into insignificance. Britain experienced a chipping away of almost 10 Billion sterling worth of Mortgage debt in 2011 bringing to the mind of 1970s when economy was in the dog house. Reduction in activity in the home market coupled with a significant reduction in re-mortgaging were the chief cause for this trend. More potential home borrowers kept away from availing finance even though banks were ready and willing to grant them finance. In fact mortgage loan approvals topped Sterling 8 Billion but much less were actually drawn down. Most lenders reported that borrowers were keen in paying existing finance at quicker pace to bring down the interest cost. They agree that the loans that exist now are booked when interest rate regime was in higher integrals.

Same story was repeated in the car finance scene too. Car sales were down 4.4 % in Britain in 2011. The number of cars sold was 1.94 Million lowest since 1994. Sales were mainly in the medium market models lending credence to the figure of 96,112 of Ford Fiesta sold. In contrast high market BMW 3 Series clutched at 42471 cars. In line with this, loans for acquiring new cars also plummeted. No major banks came out with any innovative car finance scheme in 2011. Reading from what is happening in the personal finance you cannot help but come to the conclusion that consumers are smart borrowers. Here is the sketch of their mind-sets as painted in my canvas:

1. Short-terming: Consumers have resorted to fire fighting; that is to play in the short term market rather than dabble in long term market

2. Asset as burden: They are not keen to garner assets like home and car investment that could easily become a weighty burden. Whereas blipping up expense is a manageable one. This blending of financial alchemy displays shrewd reading of the economy on the part of the borrowers

3. Lowering interest cost: Borrowers are going one over other to pay down high-interest home loans

4. Budgeting well: Consumers show remarkable ability in using interest free credit period offered by credit card companies and liquidate outstanding in time

5. Cosmics have landed: Borrowers are driven by their cosmics to play safe without getting into too many financial commitments which if goes un-checked would, potentially lead to long term instability in mental peace and financial balance. Keeping cosmic balance dictates that they go on rope walking this time around and wait for things to improve in 2012.

Muthu Ashraff

Business Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Why Buy an Existing Business?

Once you have made up your mind to be a business person next thing that strikes you is whether to start a new one on your own or buy an existing business. Both options are doable. Yet, buying an existing business seems to be an easy way out. Let us see the advantages of selecting this alternative.

1. Knowledge Bank: The first and foremost plus point is that you know the lay of the land as far as the business you intend to buy is concerned. You have details of financial, operating and marketing performance; you are appraised of its staff, customers, suppliers; you have ideas about its owners and bankers. You can get published information to corroborate what the present owners have tried to convey

2. No Sunk-cost: There is no need to re-invent the wheel; you are spared with time and money in setting up a new business and going through start-up stage ; you have no hassle of getting approvals and licenses; more than that your decision making is made much easier as you have to say yes or no

3. Ready-made: It is just like buying a ready-made suit that fits you well. When you buy an existing business you take not only the entity but everything connected with the entity. There are trained staffs attuned to the ground realities of the business; they are well equipped with systems encompassing various activities of business such as purchasing, operating, marketing, selling, billing, financing and so on. You take over a pool of customers who are time-tested and have above par credit reports. In addition, there are suppliers, reliable in honouring contracts. All these cascading benefits are of long term nature impacting your short term performance. On top of all, you are briefed on business trends and future scenarios by the owners and employees. At a given time this turns out to be your short-term asset that helps you capitalize it for long term survival

4. Business Reputation: The fourth advantage rests on reputation of the existing business. They have track experience and a name in the industry to go with. In common parlance it is known as goodwill. You buy a business associated with the kind of reputation in which it is recognized by the wider society

5. Price is creamy: Depending on how you negotiate you may end up with a big bargain if you buy a business at a stated value that is less than its market value; sometimes you may have to pay a premium price that is to pay more than the market value. In either case you get a worthy business in your hands

6. Finance available: Another key positive is that you can finance the purchase of an existing business much easily than getting money for a new start-up. Banks generally lend part of the purchase price when it changes hands. The existing bankers of a business are generally inclined to continue their relationship with the new buyer by supporting him

7. Foundation is laid: When you buy existing business you get one with solid foundation. What you have to is to build on this foundation. You can set the tone on product improvement, profitability enhancement, widening the customer base and diversifying capital sources in felicitous manner

8. No Down-time: Once you buy existing business you metamorphose as a business person overnight. There is no waiting time; absolutely no time is wasted either. You get into the hot seat sooner than later as per purchase agreement you sign up with the seller

9. Cash flows from day one: An excellent plus is the way cash-flow begins. You buy the business and immediately afterwards you see cash coming in, in correspondence with the business activities continuing unabated

10. Cosmics begin: Finally, as I say, cosmics commence to function making your life rewarding and profitable. You have chosen a business; it has its own cosmics. You are a business person and you have your unique cosmics, aspects residing within you shaping and influencing you though these are un-seen and un-noticed by you. Once you fuse both these cosmics you become a successful business guy.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Pluses and Minuses of Receivable Finance

Receivable finance is a novel and non-conventional way of converting credit sales into cash. In USA it is known as receivable finance and in the British Commonwealth as factoring. The system basically collateralizes your credit invoices. Financial institutions dealing in commercial credit are front runners in this mode of activity. Let see what it can do for you:

How it works

You sign up with a financier an agreement to finance your trade receivables. Once a credit sale is made you generate a trade invoice, deliver the goods/service to the buyer and send the invoice to the financier after receiving the acceptance to, by the buyer who signs over the face of the invoice. It is concomitant on the seller that he deals with credit worthy buyers. These invoices are verified by the financier who will do a check on the credit worthiness of the buyer and discount the bill according to the agreed rate of interest and the net amount is credited to your account. Receivable finance takes various forms:

1) Recourse Finance: Under this method you are liable to pay the financier in case the buyer does not meet his obligations on due date

2) Non-recourse Finance: In this case any buyer default is absorbed by the financier who takes adequate payment insurance to cover any perceived default

3) Processing Debt Collection: In most cases financiers would undertake processing of the debt collection including recording debt, collecting payment, depositing cheques, generating reports, chasing debtors and do other follow-up activities. Some banks grant receivable finance without undertaking collection on their part

4) Quantum of Finance: Generally financiers grant full quantum of the invoiced value less the discounting charge which is pegged onto monthly interest rates. Banks such as HSBC use a method where they extend portion of the invoice value upfront and the balance after the buyers pay up less any discounting charge

5) Selective Debtors: Under this scheme the financier has the right to choose which invoices he will finance and which he will reject.

Pluses

1. Receivable finance converts paper into money; debtors into capital; sales into cash-flow. You get your credit sales as up-front cash, improving your business sales and prospects

2. This is more flexible arrangement than bank loans or bank overdraft/line of credit. You have no hassle in submitting financials, tax returns and various other statements that are called for in processing conventional finance applications. Moreover, there is no limit imposed by the financier on the amount you can raise

3. Under no-recourse finance you have no responsibility for the eventual payment by the buyer

4. Where processing debtors is on the part of financier you are relieved of all the paper work and trouble in going behind debtors

5. You can deal in open account by enlarging your business operations; advance payment and letter of credit or accommodation are no longer necessary

6. Most important, you have cash resource to make your purchases without credit terms; this helps in negotiating for concessionary prices and favourable terms of delivery from your creditors who supply you materials and services.

Minuses

1. Before you sign up on the dotted line of the Receivable Finance Agreement, you must read and understand what it tells about your responsibility, your liability; the way you will get your finance etc. You should distinguish between recourse and non-recourse methods; on quantum of finance, selection of debtors and collection of receivables by the financier. If you do not understand the receivable finance methodology you will regret later

2. You must first ask the question. Do I really need this money from the financier? Can you employ the cash-resources on useful matters or will it simply idle in a checking account

3. Cost of receivable finance is very prohibitive compared to conventional bank loans. Discount rates currently hover between 0.75 to 1.50 % for a 30 day period. When annualized it goes as high as 9 to 18%. Can you afford this cost?

4. Receivable finance is suitable for a business that is in start-up or in first level growth stages when they are cut away from conventional banks. Once a business moves into secondary level or growth area they have enough credentials and clout to negotiate with bankers who can offer more completive schemes in financing working capital

5. Receivable finance has worked successfully in few sectors such as health care services which are covered by national health schemes or corporate re-imbursement schemes. I have seen receivable finance doing excellently well in advertisement industry. But in many other industrial or commercial sectors it could be a big flop

6. Cosmics play havoc when you get into receivable finance. Many customers feel second rated when someone else other than the seller contacts them for payment or follow-up. Later they do not turn up to buy anymore. The troubling phenomenon is that receivable financing conveys to many that the seller is going through financial woes. Your initial euphoria of getting cash promptly evaporates afterwards when you see your customers turning their backs on you. You are aware cosmics are aspects that are within you shaping and influencing your business throughout. Weigh your cosmics and your need to go for receivable finance and make a trade-off.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Business Cycle: Think Long-term and Act Short-term

Every business goes through business cycles in correspondence with the way economy expands or contracts. There are four or sometimes five phases of business cycle depending on how economy is doing. The business cycle is very much asymmetrical, that is, stages of the cycle are not equal in time duration. Whatever the duration is, a business has to go through each phases of business cycle with foresight. In doing so, it must think long-term and act short-term.

Business Cycles

The five phases of business cycles are:

1) Growth: Also known as Expansion

2) Boom: Alternatively known as Peak

3) Decline: Otherwise known as Depression or Recession

4) Bust: Synonyms are: Slump, Trough

5) Recovery: This phase is unique in that it either follows Decline or Bust phase

Characteristics of each phase and how business must respond to it is explained in details below:

1. Growth

Economy picks-up, so does business sentiments in the market. Consumer expenditure moves upward; corporate purchases jacked up in response. Business generally acts on the spur of the moment in enlarging the scope of operations and expanding business horizons. Some business can lurch out of control and swells its employees and grow helter skelter. Well managed ones get its act together and chalk out a recipe of success. Some tips:

Ø Plan out investment in technology and communication as you need this in the coming phase of boom

Ø Expand your market keeping an eye on how globalization, per se, will affect you. You have to be competitive in the local setting and if possible seek pastures abroad for your products

Ø Keep the cost down, finance pruned and your profit margin at reasonable level

Ø Develop your cosmics to work at the faster phase; cosmics are aspects residing in every person and as an extension in every business. Cosmics can arise in different ways. You have to understand cosmics and turn it to your advantages

2. Boom

Economy expands briskly and sometimes over-heated still triggers intermittent stimulus for business to beef up operations. So business blips up sales and purchases; hire more labour and commission new plants and machinery. Finance borrowing is at peak, so is the cash outlay on resources employed in both human and technical. You have twinkle in your eye as if Zeus has descended from Mount Olympus. Anyway you must have a sense of caution thus:

Ø You have to distinguish grain from the chaff; evaluate whether upscale is a seasonal one or cyclical one. Seasonal sales arise from holiday season and during summer; cyclical expansion in sales is a concomitant to economic cycle

Ø Ratchet things up a notch in new technology that you have acquired in the previous phase along with concerns for environmental issues; never neglect your responsibility in building up sustainable environment because as you come to the end of tether in boom cycle you badly need to keep progress at even keel

Ø Diversify your product line-up and markets. If you have concentrated on a single product change into multi track; you have to see new market opportunities. At the same time enhance product quality still more

Ø Get you cosmics to keep you in perfect balance without racking up wasteful expenditure

3. Decline

While economy shows signs of gradual bottoming up, overall progress in industry is stymied. Your business is unable to post big profits. You pitch your hope for a slow decline if your business is declining in relation to the economy. If you are getting into prolonged depression then you need to fear whether you can pull it over or you will be out of business soon. You must still be positive and take a safe assumption that the next stage is going to be recovery rather than slump. Tips are:

Ø Reduce overheads promptly; start negotiations with lenders on term loans and improve efficiency in purchases, inventory maintenance, sales and delivery

Ø Coach your employees on managing change so that they are well equipped in terms of attitude and skills in tackling an uncertain future

Ø Create some kind of buffer in money resources and get a life boat ready for any eventuality

Ø Cosmics can help in shaping your response to the incoming recovery, or in the worst case a bust

4. Bust

Economy totters and goes into slump. Many businesses shutter their doors. Everything appears gloomy. Should you follow suit and get lost? Far from it. Your business life must go on. You have to duke out the trough. My advice is you court success rather than embrace failure. Do the following;

Ø Becalm yourself and get going in business albeit in small scale

Ø Instead of retrenching employees ask them to work for lesser salary

Ø Check out for a major overseas buyer and come into terms with him for bulk sales; persuade your trade and finance creditors to give more time and canvass for emergency assistance from state; continue your good work in marketing

Ø Re-examine your cosmics to see how you can weather the storm

5. Recovery

Economy slowly emerges out of trouble. Business sentiments on rise, though, not to the level you saw during growth phase. Still there is light. Consumers are returning; sales are looking up. Advice:

Ø Put your business in first gear; get the budget process to check income and expenditure; prepare cash –flow on weekly basis

Ø Motivate your employees to meet up with the challenges in the business environment

Ø Fire in all cylinders and operate a fast track marketing campaign

Ø Follow what your cosmics say: You are a re-born business person

Cheers,

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Banks should Relax Mortgage Rules

Banks have gotten into a corner; from four sides they are being beleaguered, stay like a mouse in a trap. Roaring home prices on one side juxtaposed against slump in the home market in the opposite direction; skyrocketing of bank bad debts pitted against higher demand for mortgage finance on the part of home owners. Encompassed in this state banks have done what you expect them to do: tighten the rules on mortgage lending. Has this policy worked?

It has not. Many banks are reporting decline in mortgage loans approvals; overall earnings dipped in many banks. Citigroup, the U S giant is expected to post revenues in 2011 highlighting 30 % drop from the previous year. To revive banks must re-examine their policy and procedure of mortgage lending. Banks always balance their portfolio of loan assets in corporate lending as against personal finance. When one goes down other must go up. Now is the time to shift the bar of personal finance much lower. To do that, banks need to relax mortgage rules.

Matching loan to value with affordability

Conservative dictum of loan to value ratio (LAV) hovers between 60 to 75%. It means that a borrower will get a loan amount equal to this percentage of the value of the home he pledges. But there is a caveat he must be able to afford this amount. In other words the borrower must have the capacity to repay the amount he borrows. Matching loan to value and affordability has brought enough headaches to the banks. In New Zealand, acting on their own, banks upped the pole on LAV to 80 to 90% to encourage demand in mortgage loans. Banks in Hong Kong, on the other hand, were spurred to by their monetary authority to relax rules and increase the LAV. But in Britain LAV went haywire. Recent pronouncement of the UK Financial Services Authority (FSA) over mortgage rules brings out a telling example of banks violating the LAV prudence by granting loans at 125% of the LAV.

Equally important is to ensure banks assess affordability in a practical manner. The current practice of asking too much private details including listing of expenditure must be amended to a borrower-friendly regime of selective assessment. Household expenditure could be declared by the borrower in specific terms along with his take-home pay if he is an employed person. Self-certified income and expenditure can be allowed in certain cases. A thumb rule of 3 to 4 multiples of borrower annual revenue as loan quantum is in use globally. Still prudence must reign. FSA points out that in one instance a bank has gone up to seven times earnings of a borrower in granting a mortgage loan. In case there is revenue deficiency of servicing loan by a single borrower, banks should add his or her spouse as co-borrower and bring in the spouse’s income in calculating affordability. Some banks tend to act too conservative by insisting that the home to be mortgaged should also be in the joint name of borrowers. This entails legal cost and sometimes elicits disaffection from the original applicant. Another important issue is how to treat short term and long term debt declared by the applicant. Bundling together both short and long term outstanding by an applicant is morally wrong as mortgage lending is generally for a longer period. Therefore, banks need to look at the current long term debt of the applicant and decide on his affordability, leaving aside short term debt arising from credit card outstanding.

Re-mortgaging the future

After servicing personal finance, borrowers tend to ask for additional loans by doing a re-mortgage. In addition to the primary mortgage that exists, they require secondary and tertiary mortgages. If banks allow LAV of 80% on the primary mortgage the next tranche can go up to 90% and the next till it reaches 100% of LAV. Additional funding is generally tied to the future value of the property. There is no harm in extending additional mortgage, but this must not be done purely on expectation of future value. Piggy back riding on future home value has been the cause of property bust in Hong Kong. Learning lesson from real estate bust and boom cycle, banks should take up a defensive posture in assuming interest rate going up in future and in that context whether the borrower can service the additional finance cost conveniently. One way to mitigate the situation is to checkout borrower’s future income. At all cost re-mortgage by borrowers to maintain lush lifestyle must be axed.

Classifying borrowers and Credit Reports

Borrowers are classified according to credit reports and on need basis. Every bank gets a credit report of an applicant from a credit information bureau or agency. Un-paid outstanding of debt could bring credit score down. Let alone bad or miserable credit score, even poor score is frowned upon by banks. Recently approved U S “Home Affordable Refinance Programme (HARP)” advises banks to ignore slight blemish in credit report and urges that if an applicant is current in paying mortgage instalments during last six months, he be allowed to avail additional finance. On the basis of need, banks in New Zealand prefer first home buyers from others. Banks in Britain have predilection for right-to-buy tenants who apply for finance. Home movers and applicants for buying additional homes are rated low in terms of need and do not qualify for concessions.

Cosmics play a role….

For a bank as well as borrower cosmic balance is a must. When a borrower gulps up more than what he can chew he gets more worries; likewise over-exposure to a particular borrower also gives worries to a bank. Both bank and borrower must learn to have cosmic balance. Cosmics are aspects that are beyond facts & figures but still influence the conduct of personal finance between bank and borrower.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Only Business can save Countries from Chaos

Recent spat between France and Turkey after the former passed legislation criminalizing denial of Armenian Genocide has brought chaos in both countries. Surprisingly, business in both countries has risen to the occasion to bring a sense of balance and took steps to normalize the otherwise contentious situation.

On the road to chaos

Every now and then, countries spar themselves which is considered normal in diplomacy. Globally, it is a standard practice to agree to disagree. We know about the separation of power in democratic countries comprising of Legislature, Executive and Judiciary branches. A parliament of a country has sovereign right to pass legislation. But when such legislation is passed at the behest of the executive arm to spite another country then there is a crisis. Moreover, a parliament can pass a legislation commenting and naming an incident as bad in law; but when it oversteps and makes it a criminal offence to deny such incident it is arbitrary, to say the least.

Historians are still debating about massacres that took place in Eastern Turkey in 1915 when both Armenians and Turks were killed as invading forces from Russia were being resisted. Some historians consider the massacre as perpetrated by the Turks. On the other hand quite a number think contrarily and concede both Turks and Armenians were killed by Russians and their agents. Whatever the opinion is, it is best left to the historians to establish a truth commission and find out what exactly happened instead of blaming one against the other.

France passed a law in 2001 describing the incidents happened in 1915 as Armenian Genocide. In December 2012, its legislature passed a law that imposes a penalty of Euro 45,000 on a person who denies such genocide. There are 600,000 Armenians living in France whereas Turkish diaspora is about 40,000 only. The president of France, Sarkozy is facing election next year and he wants to get the Armenian support. Hence, he has instigated the passing of this piece of noxious legislation.

In its wake….

This brought huge spat between two countries. Turkey took several measures in retaliation. Recalling its ambassador, cancelling mutual meetings, cancelling military concessions granted to France on its soil. Beside these administrative measures, Turkey has unveiled economic measures. A voluntary boycotting of French goods is a business measure the Government urged on the public. In the finance field Turkey has a potent weapon. Turkish Central Bank has foreign reserves parked in Europe. The largest reserves of Euro 23 billion is held in French Government bonds. If Turkey shifts it to another country, invariably Germany Foreign Exchange stability of France can dip. In this chaotic situation politicians in both countries are doing nothing to avert a looming crisis. Ostensibly, saner counsel prevails in business circles in both countries. They express a voice of reason.

Business as saviour

Jean Lamierre and his Turkish counterpart Hasan Colegoglu, chamber presidents of France-Turkey Business Council, sprang into action. They ensured that everything is normal and business is as usual. The powerful Turkish Business Association TUSAID also intervened when its lady president Umit Boyner urged caution on the part of Turkey to be realistic and take the situation in its stride. They cannot be wrong. Look at the statistics. Turkey is France’s sixth largest import buyer; yet in terms of volume it is about 1.3 % of French exports. On the other hand, France is Turkey’s fifth largest import buyer; in terms of volume it is about 6% of Turkish exports. In value terms the mutual trade between France and turkey is estimated as 15 billion US $. Trade balance favours France with about 1 billion US$ as evidenced in Turkish exports to France at US$ 7 billion and its imports from France at US$ 8 billion.

Apart from trade, investment also works in a skewed manner. About 250 French companies operate in Turkey; you can easily spot the best French firms in Paris as well as in Istanbul. Notable amongst them are: Carrefour, Lafarge, Alcatel, Peugeot and Renault. Automaker Renault alone employs 6,000 people and operates the largest plant outside France. The total investment of French business in Turkey exceeds US$ 8 billion. Turkish investment into France is sizeable but does not exceed 1 Billion US$. About 35 big time Turkish companies have opened doors in France. Conglomerate Zorlu Holding and automaker Orhan Holding are key players. The latter employs about 460 people in France

Cosmics help keep balance

Turkey with a growth rate of 8% is second only to China today. Its booming economy, its export friendly policy, and its young and able workforce cannot go into drains due to political chaos. France is already tottering and next in line to go down in the Euro crisis. A sober assessment is the need of the hour. That has come from business, because only business understands how to keep a balance. Common sense along with cosmic balance can keep the economic ship sailing. Ignoring cosmics bring out in its wake economic imbalance, rhetoric and knee-jerk measures. Once again business in France and Turkey demonstrate that politicians bungle, gamble and ignore their mutual cosmics but only business can save the countries from impending chaos.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

What are Liquid Assets?

Whether you are in business or in career, you will have some kind of liquid assets with you. At different occasions you will be asked to declare your liquid assets. For example, when you are completing your credit card application or filling the form for personal or business finance. Therefore, it is better you get a hang of what are liquid assets.

Liquid Assets Explained

You have assets such as bank balance or real estate. Fine. When you begin to dispose the assets you find bank balance can be withdrawn on demand whereas real estate takes quite some time for its disposal. You got it right. Primarily, liquid assets can be disposed of quickly and with ease. This aspect is known as negotiability. Secondarily, such disposal must not reduce the capital amount you hold. In other words the sale value and the market value must be one and the same. Your bank balance of X amount can be withdrawn as X amount unless the bank imposes any service charge. However, in the case of real estate when you dispose you will do so discount to the market, which is sale value less than the market value. So bank balance is a liquid asset while real estate is not.

Type of Liquid Assets

On the basis of scale of liquidity I am jotting down several types of liquid assets, to enable you to take right decision in making and disposing investment:

1. Cash-in-hand: This relates to currency & coin that you have in possession. This is the most liquid ones you have. In every country the national currency is the legal tender while currencies from other countries are known as Foreign Exchange holdings. Foreign currencies are converted to local currency via Foreign Exchange market. Generally

U S Dollar is the base foreign currency for international travel and transactions

2. Cash-at-bank: You can have cash at bank in a savings account or a checking/current account. Balance in the latter can be withdrawn on demand or by writing a cheque. Generally, savings account balance can be withdrawn on demand, but some banks such as HSBC restricts the withdrawals to once a week

3. Un-utilized balance in Debit card: Any balance not withdrawn so far from your debit card is ranked third in our liquidity scale. You can swipe it anywhere or present over the counter and draw out money. I must caution you about an erroneous impression many of you have about credit cards. Unlike debit card, credit card has no liquidity in-built. It only helps you to finance your purchases out of the issuer’s money and not yours

4. Mutual / Unit Trust fund: Your mutual/unit trust account is ranked next in the liquidity scale. You can give notice generally one day, and withdraw an amount from mutual / unit trust account that lie to your credit. However, if you wish to take out the full amount your account need be closed prior to such withdrawal

5. Money Market fund: Similar to the mutual in terms of liquidity, money market funds differ in terms of volume and value. Generally, you are required to give notice before effecting any withdrawal

6. Surrender /Cash value in Life Insurance Policy: As you continue to pay your premiums on the life insurance policy, it collects a pool of money and after a certain period it begins to be marked as surrender or cash – value. This amount can be readily withdrawn or be pledged to a lender for a personal finance

7. Treasury Bills: Though Treasury Bill is considered as a guild edged investment with high degree of liquidity it suffers from a snag. Depending on the market movement for short term funds it will be quoted either premium or discount to market value. Good times you get premium; bad times you get discount. Hence, there is an equal chance of losing part of the capital stated on the face of the bill

8. Government Bonds: Similar to Treasury bills in price movement; yet, Government bonds do so in wide margin. Assuming you got the bond at 5% interest rate and the current rate of interest is 7% then the bond’s capital value will be reduced. Never the less Government bonds give you safety, guarantee and above all liquidity

9. Liquid Shares in Stock Market: Although there is huge volatility in the stock market, any shares that you hold which is traded frequently in the market can be counted as liquid asset

10. Amount due to you via Legal / Admin process: This is the last item in our liquidity portfolio. If there is any court order for damages payable to you or any award made say in the case of partition tantamount to be a liquid asset arising from legal process. In similar fashion business persons sometimes get grants or tax refunds that are construed as liquid asset arising from administration process.

Before you make an investment in or dispose of any liquid assets, you must ensure that you maintain cosmic balance. Cosmics are aspects that are beyond facts & figures but still influence the conduct of your finance and investment; cosmics reside in every individual and by extension in everything he is engaged in generating finance. If you understand your cosmics you can develop a right mix of liquid assets in your portfolio.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Tips for Choosing Right Business Location

 

Whatever business you are engaged in, your success depends on a single most factor: Business Location. You would have read about several businesses shuttering their doors after few months of existence due to location issues. Choosing the right business location is a sine quo non in business process. Here are ten tips for doing that:

1. Traffic: As you know traffic relates to the number of people visiting and walking around a location for business transactions, window shopping or just for fun. Out of the traffic a certain percentage gets translated into real business transaction. The rest creates a pool of admirers or by-the-mouth promoters who spread good word around about a location. This helps business generally in building clientele. Hence, you must examine the quantum of traffic before you zoom in at a location

2. Business Potential: Evaluate economic trends in and around the area where you wish to locate. Is the area growing in terms of economy? It is no point you locate your business in places where there is no apparent growth. Still more important is the volume of business that is being done in the locality. For example, New York remains the best dreamed for location for any type of business

3. Area: Ascertain what kind of area you are getting in. If you go for hustle and bustle the location must be in the centre of city where you have more business rolling in. If you prefer silence and serenity an exclusive location gives you that added feel. Day to day business needs a location where several businesses are located in same area bringing more traffic and more deals. On the other hand if you are running wholesale business or industrial products you must search for a location in the periphery of city

4. Convenience: This is a multi-faceted factor. You have to appraise whether the location offers convenience to your employees, customers / clients, suppliers and the public. Convenience depends on several issues, chiefly, ease of approach to the location, conducive environment and availability of alternate routes in case of any emergency. Customers prefer to do business where they feel comfortable. For example they prefer a business that provides adequate parking facility with security

5. Transport: This factor relates to goods moving to and fro the business location. If you do not have a separate warehouse your current business location must be fitted with a store that is equipped to receive and despatch goods. When bulk good arrives from a supplier you need sufficient facilities to un-load, sort out and store these in orderly manner. Delivery of goods demands the same features with an add-on: you have to do this in timely fashion without any delay

6. Restrictions: Ascertain the type of restrictions, if any, that prevail in the location. Restrictions work in different ways. Begin your survey with zoning rules that restrict certain business activities and then proceed to local area rules regarding transport, parking, hours of business etc. If you eye a location in a shopping mall or supermarket, you have to check with the management regarding rules of business conduct. Finally, you must ensure that safety and security rules covering the location could be adhered to by you easily

7. Amenities: While convenience relates to the ease of business process, amenities are important for human welfare. You must tick the type of amenities available and the quantum from either the local authority or the management of a shopping centre. Amenities include, provision of water, sewerage, waste disposal, fire exits, fire hosts and many others. Additionally, you must review availability of watering holes where visitors can have drink or coffee unless you are going to provide in-house services

8. Reputation: Measure the fame and note of a location carefully before you do anything. Does this location is a reputed one where people want to do business? Many people get attracted to a particular location or shopping centre due mainly to its reputation and goodwill. Moreover, you have to look for competitors in that location. If they are doing well there is no reason why you cannot. Some locations are famed for a particular trade. For example, Wall Street is famous for finance. Therefore, if a location is the one most appropriate for your type of business then grab it

9. Cost: Finance is the ultimate arbiter. Can you afford the cost of having your business in this location? Check what the price of the location is, if you are buying it outright. For rent or lease see the amount of down-payment, deposit and monthly rentals. You have to find out the cost of amenities and convenience including parking facilities. You are not just buying a location you are taking the entire suite of the eight items described above.

10. Cosmics: Why cosmics? You will ask me. Yes, you need cosmics indeed. So far we have been concerned with utility aspects; now it is the turn for aesthetics to play its role. Cosmics arise from you as well as from the location. Your cosmics are aspects residing within you shaping and influencing you and your business though these are un-seen and un-noticed by you. Location cosmics relate to aesthetics residing in a particular location. I recently visited Kuala Lumpur, Malaysia to select a location for a business. After looking at few places I recommended one mall that had brilliant cosmic energy pervading and striking anyone who enters in.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/