A business (also called a company, enterprise or firm) is a legally recognized organization designed to provide goods and/or services to consumers.[1] Businesses are predominant in capitalist economies, most being privately owned and formed to earn profit that will increase the wealth of its owners and grow the business itself. The owners and operators of a business have as one of their main objectives the receipt or generation of a financial return in exchange for work and acceptance of risk. Notable exceptions include cooperative enterprises and state-owned enterprises. Businesses can also be formed not-for-profit or be state-owned.
The etymology of "business" relates to the state of being busy either as an individual or society as a whole, doing commercially viable and profitable work. The term "business" has at least three usages, depending on the scope — the singular usage (above) to mean a particular company or corporation, the generalized usage to refer to a particular market sector, such as "the music business" and compound forms such as agribusiness, or the broadest meaning to include all activity by the community of suppliers of goods and services. However, the exact definition of business, like much else in the philosophy of business, is a matter of debate.
Tuesday, October 27, 2009
Friday, October 23, 2009
Bank Bonuses Spark Talent War
or as long as there has been outrage over Wall Street megabonuses, executives have justified their handsome rewards by warning that if companies didn't pay up, talent would flee to rival firms. Now it appears that theory is being confirmed. Recruitment experts hired by Wall Street trading houses, which are expanding to handle booming stock and bond trades, say they are zeroing in on companies such as Citigroup (C), American International Group (AIG), and others that are under U.S. or European pay restrictions.
"The target list of nearly every major executive search firm these days includes executives from firms under TARP control," says Dennis Carey, a senior client partner at executive search firm Korn/Ferry International (KFY). He is referring to the Troubled Asset Relief Program, which pumped billions of U.S. taxpayer dollars into banks like Citi and Bank of America (BAC) during the financial crisis but also capped pay at the firms. "There's a significant opportunity to raid that talent," Carey says.
White House officials said on Oct. 21 that federal pay czar Kenneth Feinberg will slash total compensation for the top 25 highest earners at the seven firms that received massive injections by an average of 50% and lower salaries by 90% on average. Earlier in the month, Britain announced it had signed up Barclays (BCS), HSBC (HBC), Lloyds Banking Group (LYG), Standard Chartered (STAN.L), and the Royal Bank of Scotland (RBS) to follow limits on bonuses agreed upon by the Group of 20 nations at their September meeting in Pittsburgh. Those recommendations included deferring some bonuses and the possibility of later "clawbacks" of awards if the performance upon which they're based doesn't hold up.
New Rules from the Fed
The pay gap could be tightened somewhat under rules the Federal Reserve proposed on Oct. 22. Banks in the U.S. would have to start persuading their regulators that pay practices don't threaten the bank's stability by encouraging excessive risk-taking; the Fed plans to compare pay policies across some 28 big and complex banks to rein in risk as well. But the rules may not go into effect for weeks or months as the Fed solicits and digests comments on the idea, and the proposal includes no firm pay limits or formulas.
Some financial institutions have emerged from the financial crisis intact and eager to seize market share from their troubled rivals. Firms such as Goldman Sachs (GS) and JPMorgan Chase (JPM) quickly paid back their TARP funds so they could operate free of the federal restrictions—and now find that position to be a valuable recruiting tool. "This is certainly one competitive advantage for some organizations, albeit one that is quite unique to this moment in time in the markets," says Timothy L. Holt, managing partner in the financial-services practice at executive recruiting firm Heidrick & Struggles (HSII).
Case in point: On Oct. 26, AIG Vice-Chairman Matthew Winter will become head of Allstate's (ALL) life insurance and retirement unit. Winter is one of at least 49 managers the beleaguered insurance giant has lost since September 2008, according to Bloomberg. AIG is struggling to turn itself around following a federal government infusion that has now reached $182.3 billion
"The target list of nearly every major executive search firm these days includes executives from firms under TARP control," says Dennis Carey, a senior client partner at executive search firm Korn/Ferry International (KFY). He is referring to the Troubled Asset Relief Program, which pumped billions of U.S. taxpayer dollars into banks like Citi and Bank of America (BAC) during the financial crisis but also capped pay at the firms. "There's a significant opportunity to raid that talent," Carey says.
White House officials said on Oct. 21 that federal pay czar Kenneth Feinberg will slash total compensation for the top 25 highest earners at the seven firms that received massive injections by an average of 50% and lower salaries by 90% on average. Earlier in the month, Britain announced it had signed up Barclays (BCS), HSBC (HBC), Lloyds Banking Group (LYG), Standard Chartered (STAN.L), and the Royal Bank of Scotland (RBS) to follow limits on bonuses agreed upon by the Group of 20 nations at their September meeting in Pittsburgh. Those recommendations included deferring some bonuses and the possibility of later "clawbacks" of awards if the performance upon which they're based doesn't hold up.
New Rules from the Fed
The pay gap could be tightened somewhat under rules the Federal Reserve proposed on Oct. 22. Banks in the U.S. would have to start persuading their regulators that pay practices don't threaten the bank's stability by encouraging excessive risk-taking; the Fed plans to compare pay policies across some 28 big and complex banks to rein in risk as well. But the rules may not go into effect for weeks or months as the Fed solicits and digests comments on the idea, and the proposal includes no firm pay limits or formulas.
Some financial institutions have emerged from the financial crisis intact and eager to seize market share from their troubled rivals. Firms such as Goldman Sachs (GS) and JPMorgan Chase (JPM) quickly paid back their TARP funds so they could operate free of the federal restrictions—and now find that position to be a valuable recruiting tool. "This is certainly one competitive advantage for some organizations, albeit one that is quite unique to this moment in time in the markets," says Timothy L. Holt, managing partner in the financial-services practice at executive recruiting firm Heidrick & Struggles (HSII).
Case in point: On Oct. 26, AIG Vice-Chairman Matthew Winter will become head of Allstate's (ALL) life insurance and retirement unit. Winter is one of at least 49 managers the beleaguered insurance giant has lost since September 2008, according to Bloomberg. AIG is struggling to turn itself around following a federal government infusion that has now reached $182.3 billion
Sunday, October 18, 2009
Guide to Analyzing and Interpreting Financial Statements
Understanding the financial details of your business – and, at times, being able to communicate them to others – can mean the difference between success and failure. Informed business owners pay attention to the numbers that show whether a business is profitable, has cash flow problems or is spending too much in certain areas. Analyzing financial data also can help you set business objectives on a monthly, quarterly or yearly basis. Here are three reasons to organize and study financial statements:
Get an overview of how your business is doing and where it is heading.
Keep control of general and administrative expenses.
Careful records can help attract investors to your business.
Action Steps
The best contacts and resources to help you get it done
Discover the details of different financial statements
The income statement and balance sheet are the main parts of a financial statement. Income statements, also called profit and loss (p&l) statements, show the money in (income, revenue and sales) and money out (expenses and costs) of a business. What's left over is the profit. Balance sheets show what a company owns and what it owes. A cash flow statement looks at ways cash enters and leaves a company.
I recommend: Get up to speed on financial statements at StudyFinance or Tutorialized. At StudyFinance, from the University of Arizona, you can get a particularly succinct overview and examples of key statements, including the balance sheet, income statement and other basic financial statements.
Know the important line items
There are several key pieces of information you'll want to analyze. Working capital is determined by subtracting current liabilities from current assets. Look at the amount of revenue you earn on a monthly, quarterly and yearly basis to see if you are meeting your business objectives. Compensation may be one of the biggest expenses if you have employees. Don't forget to include the costs of your own salary and benefits.
I recommend: The U.S. Small Business Administration has a helpful section on financial statement basics for business startups. You'll find detailed explanations of balance sheets and income statements.
Enlist software help to get your financial ducks in order
Financial software can help collect and organize financial information, as well as run a wide range of charts and reports.
I recommend: Install MYOB or Quick Books on your computer to handle your accounting needs. Use the budgeting function to record numbers and generate reports. Each program offers extensive help to prepare and understand the different types of financial statements you can produce.
Check the bottom line on profits
Profit margin is found by subtracting general and administrative expenses from gross profit, then dividing that number by sales.
I recommend: Infor has software that creates financial reports. Write an annual report to share company progress and financial data with investors.
Establish more financial credibility
Listing your company's financial information with a business database can help give potential clients an overview of your company's financial history and stability. Financial statements, bill-paying history and creditworthiness are just some of the areas that clients may be able to access in a report about your company.
I recommend: D&B has small business reporting solutions.
Tips & Tactics
Helpful advice for making the most of this Guide
Manage information proactively and look through financial statements on a monthly basis.
Carefully kept records are crucial in case you must respond to an outside audit.
Keep an internal trail of transactions so that you can track any discrepancies, such as unrecorded payments.
Get an overview of how your business is doing and where it is heading.
Keep control of general and administrative expenses.
Careful records can help attract investors to your business.
Action Steps
The best contacts and resources to help you get it done
Discover the details of different financial statements
The income statement and balance sheet are the main parts of a financial statement. Income statements, also called profit and loss (p&l) statements, show the money in (income, revenue and sales) and money out (expenses and costs) of a business. What's left over is the profit. Balance sheets show what a company owns and what it owes. A cash flow statement looks at ways cash enters and leaves a company.
I recommend: Get up to speed on financial statements at StudyFinance or Tutorialized. At StudyFinance, from the University of Arizona, you can get a particularly succinct overview and examples of key statements, including the balance sheet, income statement and other basic financial statements.
Know the important line items
There are several key pieces of information you'll want to analyze. Working capital is determined by subtracting current liabilities from current assets. Look at the amount of revenue you earn on a monthly, quarterly and yearly basis to see if you are meeting your business objectives. Compensation may be one of the biggest expenses if you have employees. Don't forget to include the costs of your own salary and benefits.
I recommend: The U.S. Small Business Administration has a helpful section on financial statement basics for business startups. You'll find detailed explanations of balance sheets and income statements.
Enlist software help to get your financial ducks in order
Financial software can help collect and organize financial information, as well as run a wide range of charts and reports.
I recommend: Install MYOB or Quick Books on your computer to handle your accounting needs. Use the budgeting function to record numbers and generate reports. Each program offers extensive help to prepare and understand the different types of financial statements you can produce.
Check the bottom line on profits
Profit margin is found by subtracting general and administrative expenses from gross profit, then dividing that number by sales.
I recommend: Infor has software that creates financial reports. Write an annual report to share company progress and financial data with investors.
Establish more financial credibility
Listing your company's financial information with a business database can help give potential clients an overview of your company's financial history and stability. Financial statements, bill-paying history and creditworthiness are just some of the areas that clients may be able to access in a report about your company.
I recommend: D&B has small business reporting solutions.
Tips & Tactics
Helpful advice for making the most of this Guide
Manage information proactively and look through financial statements on a monthly basis.
Carefully kept records are crucial in case you must respond to an outside audit.
Keep an internal trail of transactions so that you can track any discrepancies, such as unrecorded payments.
Tuesday, October 6, 2009
Guide to Analyzing and Interpreting Financial Statements
Understanding the financial details of your business – and, at times, being able to communicate them to others – can mean the difference between success and failure. Informed business owners pay attention to the numbers that show whether a business is profitable, has cash flow problems or is spending too much in certain areas. Analyzing financial data also can help you set business objectives on a monthly, quarterly or yearly basis. Here are three reasons to organize and study financial statements:
Get an overview of how your business is doing and where it is heading.
Keep control of general and administrative expenses.
Careful records can help attract investors to your business.
Action Steps
The best contacts and resources to help you get it done
Discover the details of different financial statements
The income statement and balance sheet are the main parts of a financial statement. Income statements, also called profit and loss (p&l) statements, show the money in (income, revenue and sales) and money out (expenses and costs) of a business. What's left over is the profit. Balance sheets show what a company owns and what it owes. A cash flow statement looks at ways cash enters and leaves a company.
Get an overview of how your business is doing and where it is heading.
Keep control of general and administrative expenses.
Careful records can help attract investors to your business.
Action Steps
The best contacts and resources to help you get it done
Discover the details of different financial statements
The income statement and balance sheet are the main parts of a financial statement. Income statements, also called profit and loss (p&l) statements, show the money in (income, revenue and sales) and money out (expenses and costs) of a business. What's left over is the profit. Balance sheets show what a company owns and what it owes. A cash flow statement looks at ways cash enters and leaves a company.
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