Wednesday, March 22, 2017

ACCOUNTING & FINANCE VACANCIES

VISIT ZOOM TANZANIA FOR MORE INFORMATION

Friday, February 3, 2017

Consider a knowledge to You, read on the following business structures operated in general all over the world.

Sole Proprietorship

A Sole Proprietorship is one individual or married couple in business alone. Sole proprietorship are the most common form of business structure. This type of business is simple to form and operate, and may enjoy greater flexibility of management, fewer legal controls, and fewer taxes. However, the business owner is personally liable for all debts incurred by the business.

General Partnership

A General Partnership is composed of 2 or more persons (usually not a married couple) who agree to contribute money, labor, or skill to a business. Each partner shares the profits, losses, and management of the business, and each partner is personally and equally liable for debts of the partnership. Formal terms of the partnership are usually contained in a written partnership agreement.

Limited Partnership

A Limited Partnership is composed of one or more general partners and one or more limited partners. The general partners manage the business and share fully in its profits and losses. Limited partners share in the profits of the business, but their losses are limited to the extent of their investment. Limited partners are usually not involved in the day-to-day operations of the business.

Limited Liability Partnership (LLP)

A Limited Liability Partnership (LLP) is similar to a General Partnership except that normally a partner doesn’t have personal liability for the negligence of another partner. This business structure is used most by professionals, such as accountants and lawyers.

Limited Liability Limited Partnership (LLLP)

A Limited Liability Limited Partnership is a Limited Partnership that chooses to become an LLLP by including a statement to that effect in its certificate of limited partnership. This type of business structure may shield general partners from liability for obligations of the LLLP.

Corporation

A Corporation is a more complex business structure. A corporation has certain rights, privileges, and liabilities beyond those of an individual. Doing business as a corporation may yield tax or financial benefits, but these can be offset by other considerations, such as increased licensing fees or decreased personal control. Corporations may be formed for profit or nonprofit purposes.

Nonprofit Corporation

A Nonprofit Corporation is a legal entity and is typically run to further an ideal or goal rather than in the interests of profit. Many nonprofits serve the public interest, but some engage in private sector activities. If your nonprofit organization is, or plans to, raise funds from the public. Charitable activities may require additional registration. Contact the Office of the Secretary of State for more information.

Limited Liability Company (LLC)

A Limited Liability Company (LLC) is formed by 1 or more individuals or entities through a special written agreement. The agreement details the organization of the LLC, including provisions for management, assignability of interests, and distribution of profits and losses. LLCs are permitted to engage in any lawful, for-profit business or activity other than banking or insurance.

Massachusetts Trust

A Massachusetts Trust is an incorporated business with the property being held and managed by the trustees for the shareholders. The trustees are considered employees since they work for the trust.

Trust

A Trust is a legal relationship in which one person, called the trustee, holds property for the benefit of another person, called the beneficiary.

Joint Venture

A Joint Venture is formed for a limited length of time to carry out a business transaction or operation.

Tenants in Common

A Tenants in Common allows 2 or more people to occupy the same business while retaining separate identities in regard to assets or liabilities resulting from business activities.

Municipality

A Municipality is a public corporation established as a subdivision of a state for local governmental purposes.

Association

An Association is an organized group of people who share in a common interest, activity, or purpose.

Monday, October 19, 2015

HOW TO SUSTAIN BUSINESS GROWTH


*Barabara Francis, C.E.O of Barabara Associates Ltd*

Achieving growth: Recommendations for increasing the probability of Business success

1. Strengthen the execution infrastructure by investing in ‘safe bets’.

Regardless of which growth strategy is selected, a firm’s infrastructure must be up to a standard that supports successful execution. An on-going commitment to creating such an infrastructure is a ‘safe bet’. Achieving this requires (1) eliminating departmental or regional silos, (2) utilizing leading indicators and performance drivers that align with the strategy and (3) growing leaders at all levels – managerial and non-managerial. (See Sections 4, 5 and 6.)

2. Initiate a process to identify strategies with a high probability for success.

Three customer growth strategies are presented below: (1) Growing the core business, (2) Growing by sub-segmenting customers and (3) Growing adjacent opportunities. It is recommended that the senior leaders begin the process by considering the growth potential within the present core business and/or the opportunities and growth potential associated with creating innovative value propositions for underserved customer groups. As the senior leadership group moves through this process, it will become clear if and when adjacent growth options should be considered. (See Sections 1, 2 and 3.)

Customer-Focused Growth Strategies

1. The process of identifying profitable growth opportunities most often begins with the Core Business¹, that is, the products, services, customers, channels and geographic areas that generate the largest proportion of revenue and profits. In-depth conversations with the senior leaders on the topic, “What is our core business?”, is the preferred starting point.
An evaluation of the overall performance of the core business follows. This involves measuring and benchmarking profitability, rate of revenue growth and the firm’s reputation with its most important customers.

Such an assessment will raise a number of questions. For example:

In what direction is each of these key indicators headed and why?
Who are and who are not the core customers? Why?
What is the firm’s key competitive market differentiator? How can it be strengthened?
Is the core business under major threat?
Are there attractive growth opportunities within the core?

When considering these questions, input from external stakeholder groups is very helpful, particularly from loyal and even not-so-loyal customers.

The overall process need not take a great deal of time, but can yield significant returns. These include:

A renewed commitment to operational excellence within the core business,
Insightful conversations on the growth potential of the core business, or conversely,
An urgent need to make significant changes to the core or even a plan for abandoning the present core and exploring more profitable growth options.

Acklands-Grainger Inc., a leading Canadian industrial supply company, initiated such a process.
Prior to doing so, Acklands-Grainger was described as a “stodgy Canadian supply company…complacent” and one with a 4% growth rate. “In less than 12 months” it had been transformed “to an exciting place to work with (close to) a 20% growth rate and higher profitability”.² How did such a dramatic change occur?
The starting point was winning the commitment of key employees at all levels, individuals who were willing to step forward and lead.
Processes were created to help refocus on the core business. Key elements included (1) defining three market platforms on which the core business is based – Industrial, Fleet and Safety, (2) eliminating products and markets that did not fit on these platforms, (3) adding new products to augment the core and (4) strengthening market coverage with significant investments in the two major channels – sales depots and the firm’s website.
2. A second customer-focused growth strategy is based on the firm’s existing customers. This strategy involves creating High Impact Value Propositions for new customer sub-segments. Underpinning this strategy is the willingness to view customers through a different set of lenses.
A process can be created to assist both managers and specialists at the customer interface gain fresh insights into customer needs and preferences. This is a necessary first step in discovering underserved customer groups and hidden growth opportunities. (Senior leaders who frequently interact with customers can make a significant contribution to this process.)
Key elements of this process include (1) sub-segmenting existing customer groups based on newly discovered needs, buying patterns and contribution to profits and/or revenue, (2) creating innovative and high-impact value propositions for the most attractive sub-segments, (3) field-testing the new value propositions and (4) scaling-up based on the results of field tests.³
In addition, some firms choose to focus on lower end customer sub-segments. These are usually groups of customers for which the cost of supplying and servicing exceeds the revenue the customer generates. In such cases, value propositions can be designed which will move the customer to a profitable position or at least minimize the losses. For example, direct sales calls can be replaced with on-line ordering systems and non-essential product/service features can be eliminated. These actions not only lower the costs of serving customers but often also lower the customer’s cost. After the initial shock, many customers welcome the new lower-value proposition.
Leading Canadian financial organizations have successfully applied this overall approach to sub-segmentation. But so have mid-sized and small firms, e.g. The International Group Inc., a Toronto-based petroleum specialties manufacturer and third-generation family business. Also, think of your favorite owner-managed restaurant, the one you select for meetings with important clients or special family occasions. Such businesses often owe their success to delivering attractive value propositions to different customer sub-segments.
3. A third customer-focused strategy is to enter businesses that have strong strategic links to the core – adjacent businesses¹. This is a particularly appealing alternative when the core business is approaching its full potential, operates efficiently and generates surplus cash for reinvestment. It is also an important option when it is clear that the core’s future growth potential is weak.
Many leaders prefer to start this process by focusing on current customers. A series of meetings with the most innovative customers can be a valuable source of opportunities. Alternative channels, new products or services or even new joint ventures may be suggested as well as entering new geographic markets, serving different customer segments and redesigning the customer’s value chain.
Another alternative is to consider the non-core businesses of the firm. Is there the potential to leverage present positions into attractive growth opportunities?
When considering adjacent growth alternatives, the relationship to the core business requires special consideration – specifically an assessment of the major strategic differences and similarities with the core. Too many differences can overly tax the organization’s capabilities. To minimize this risk, business leaders may wish to test their organization’s capacity by piloting adjacent growth initiatives in stages, one or two degrees of strategic difference at a time.
Some leaders choose to look at adjacent growth options in an opportunistic manner – as one-offs. This often results in disappointment. Initial successes with one or two close customers can soon fade under the onslaught of strong established competitors. To prevent this, leaders are advised to “organize to suit the new business as much as the core”.⁴
Tim Hortons presents an interesting example of an adjacent growth strategy.
After a series of market tests, this prominent Canadian organization identified regions in the U.S. north east and mid west in which there is potential for profitable growth. Based on these tests, the firm is selectively investing in establishing a position in these highly competitive markets.
Contrast entering new geographic markets with the alternative adjacent growth strategy of creating a new product platform in the core Canadian market – specifically, soup and sandwich lunches and more recently the very popular breakfast sandwiches. These new product initiatives have significantly increased revenue (and profits) within existing stores.⁵
In the short term, adjacent growth initiatives that leverage a strong position with existing core customers have a higher probability of success. The alternative of expanding into new geographic markets provides the advantage of building a larger customer base, but often at the cost of a longer payback period and higher risk.

Executing growth strategies

The three Customer-Focused Growth Strategies described above require a supporting infrastructure to increase the chances of successful implementation. Lack of an adequate infrastructure is the second reason cited for not achieving growth objectives.
A supportive infrastructure includes (1) organization capabilities that are valued by customers, (2) a management-performance system and scorecard which focuses on leading indicators and the drivers of growth and (3) strong leadership practices at every level of the organization.

1. Organization capabilities are processes that are strategic and deliver a high level of value to customers. For example, a firm may have the capability to:

Successfully entering new markets,
Create excellent new products or services which appeal to customers, or
Provide an outstanding level of customer service.

Note that the three organization capabilities selected are vital to the success of specific Customer-Focused Growth Strategies.
Each of these capabilities is rooted in processes that move across the organization and require the expertise and commitment of various individuals and departments.
It’s widely accepted that an organization’s success is rooted in its competitive-edge, organizational capabilities. Therefore, a major challenge that senior managers face is to clarify, assess and continually strengthen their organization’s strategic capabilities.

An important aspect of the clarifying and assessing process requires that senior managers step outside their organization and evaluate both their firm and their competitors’ through the eyes, mind and heart of the customer. The following guidelines will help with such an assessment. The capability should be:

Highly visible to key individuals within the customer organization, and acknowledged as providing exceptional value.
Difficult for present and potential competitors to replicate.

As an example, let’s examine the capability to provide an outstanding level of customer service in a manner that would make it difficult for competitors to replicate. In order to provide such a high level of customer service, employees from different departments (not only the Customer Service Department) must be involved in service delivery. Employees throughout the organization should connect quickly and collaborate willingly. Collectively, relevant information and insights about customers and product or service delivery must be shared.
The high level of cross-departmental collaboration required can prove challenging for some organizations, particularly those with rigid vertical structures. Such structures make it difficult for employees to adapt and respond to special customer service requirements. Note that under these conditions, an employee’s loyalty often shifts from the firm to their department or profession.
Delivering a superior level of customer value requires uninterrupted flow across the organization. Eliminating barriers to flow – breaking down departmental silos- is a necessary first step to building an organization’s strategic capabilities, regardless of the specific capability.
Let’s return to the question of how difficult will it be for a competitor to replicate a key organizational capability. It should be very difficult! A number of senior leaders view organization capabilities as the key element of their business strategy. These leaders focus on continually building and leveraging the organizations’ capabilities to drive new business growth.⁶
2. A second key element of infrastructure necessary for successful execution is the Performance Management system and scorecard. (Note: Performance Management systems are rooted in the widely held belief that “what gets measured gets done”.)
The process starts by answering the question, what should be measured and why?

The following guidelines help answer this question.

Scorecards depict key strategic relationships, particularly between the desired performance outcomes such as revenue and profit growth and the drivers of performance (e.g. new market entry, service quality, customer loyalty, employee engagement).
Performance of both individuals and departments (or regions) is directly linked to the growth strategy and successful execution.
Company scorecards should provide a balanced perspective based on the needs of key stakeholders groups and/or major organizational processes – internal operations, value provided to customers and employee development.

Let’s assume that the overall strategy of a firm is to grow the core business and that growth will be achieved through increased market penetration of existing products. What are the drivers of growth that must be measured, monitored and managed?
This question is best answered by those directly involved. Precise measurements are not always possible but proxy indicators established in a thoughtful and open manner are. Let’s assume that increased market penetration will be driven by the strength of the company’s brand and customer loyalty. But what drives customer loyalty and brand strength? Is it the quality of service provided, the reputation of the sales staff or the depth of knowledge of the customers’ business and requirements?
When there is a reasonable level of confidence that the above questions have been answered, the process shifts to (1) how and when will performance be measured, (2) how will those directly responsible access the performance measurement and (3) what follow-up action, if any, is necessary?
Performance management systems based on the processes described are becoming more evident in successful organizations. A brief description of the approach RBC Banking uses follows.
Leaders in the Banking Group have utilized performance scorecards to link execution with overall business strategy for a number of years. The scorecard has been aligned with four major stakeholder groups – customers, employees, shareholders and the communities in which the bank resides.
The focus is on measuring and monitoring leading indicators – for example, the drivers of customer loyalty, employee engagement and financial results. Considerable input from many sources is solicited before these measures are set and appropriate action undertaken to continually improve performance.⁷
3. The third key ingredient of a supportive infrastructure is Leadership.

Who are leaders and what do they do? Leaders are people throughout the organization who influence the attitudes and actions of colleagues. As such, they help colleagues understand the many why’s of organizational life. For example:

Why the organization must perform at a high level in the increasingly competitive and global business environment.
Why barriers to cross-departmental collaboration are harmful and weaken the organization’s ability to adapt.
Why, when a colleague’s performance appears to fall short, it may be preferable to view this as an opportunity for learning and professional development rather than expulsion from the organization.
Why the ultimate success of the organization is rooted in its ability to continually be innovative in delivering value to customers.

Leaders are found at all levels in organizations, including, non-titled, non-managerial positions. They are best identified by their behaviours and influence rather than the hierarchical position. Together, such leaders create a network that reflects the very essence of their organization – ‘who we are, where we’re going and how we’ll get there’.
Such a perspective on leadership significantly differs from the more traditional ‘leader as hero’- the person who fires-up the troops, leads the charge and performs ‘heroic’ feats.
Can leadership skills be developed? The answer is clearly “Yes”. Some organizations owe their success to being able to recognize that the organization is a lab for leadership development. The process of leadership development can start with an assessment of an individual’s emotional intelligence, a key predictive attribute of successful leaders at all levels. Hands-on learning experiences with one-on-one coaching and mentoring are also vital elements of the process.
The relationship between senior leaders and other leaders throughout the organization merits special consideration. Senior leaders ultimately set the overall direction and create conditions that encourage others to join in and lead – particularly with respect to executing the strategy. A condition that has proven effective is the continual reinforcement by senior leaders of the expectation that all employees should exhibit leadership behaviours. With persistence, the growing network of leaders will tip the scales as other members of the organization from every level and in every role join in and commit.
Two organizations, Southwest Airlines and KI (formerly Krueger International), a mid- sized furniture manufacturer, have taken different approaches to the challenge of building leadership at all level and in all roles.
Since its founding, Southwest Airlines has focused on the hiring process. The organization created a unique candidate screening process that has been highly effective in selecting individuals whose values and abilities embody unique and imaginative approaches to dealing with challenges. Such individuals are a good fit with the highly disruptive and innovative low-cost strategy of the airline.
When employees share identical values with the values of the company founder and connect at a very basic level with the organization’s core business strategy, it can be expected that each employee will step forward and lead. Over the last 5 years, Southwest’s sales have grown at an average annual rate of 11 percent. The airline has been profitable for the last 34 years.
Approaches that can be adopted based on the belief that (1) teaching employees how to think like a business person and (2) providing all employees access to whatever information is required is an absolute necessity. These beliefs have been continuously demonstrated at well-attended regular scheduled monthly meeting organized by the president. Employees at all levels and in every role receive performance-related information from the president and discuss how to solve problems and capitalize on opportunities. (Note: As a result of the diligent efforts of the president, all employees are company owners.)
The company’s growth strategy has drawn on the approaches described in this article – redefining and growing the core (expanding the product line), entering adjacent businesses (European expansion) and focusing on new market segments and sub-segments (universities, leading high tech firms). During the president’s tenure, sales increased from $45 Million to $630 million, an annual growth rate of 14%. The annual growth in ROI exceeded 30%.
In summation, we can say that the probability of achieving profitable growth is heightened whenever an organization has a clear growth strategy and strong execution infrastructure. One without the other impairs the probability of success.

Wednesday, August 12, 2015

COMMITED TO CLIENTS


Renatus Barabara, CPA (T) 1982 - Company Vision Founder

I would like to thank God, My Family and all Clients of Our Company....
To assure our Prospective Clients that we are the Registered Company in Tanzania that deals with software distribution specifically accounting software and we are the Certified Consultants of QuickBooks Tanzania.
The team of the Barabara Associates Limited is alwayz ready to pave the way to people with ideas, Creativity and Innovation.
Our team :-
Company Chairman - Barabara Renatus (B. Accounting)
Chief executive Officer - Francis Barabara (B. Com, Accounting)
Chief Finance Officer - Joseph Barabara (B. Accounting)
Chief Operating Officer - Amaniel Barabara (Dr. On Progress)
Company Secretary - Celine Barabara (BBA, Management Accounting)
Company Legal Officer - Elizabeth Barabara (LLB, Advocate)
Public Relation Officer - Pascazia Barabara (B.A, Sociology).

Wednesday, June 24, 2015

INVESTMENT HISTORY

Investment

Investment is time, energy, or matter spent in the hope of future benefits actualized within a specified date or time frame. Investment has a different meaning in finance from that in economics.
In finance, investment is buying or creating an asset with the expectation of capital appreciation, dividends (profit), interest earnings, rents, or some combination of these returns. This may or may not be backed by research and analysis. Most or all forms of investment involve some form of risk, such as investment in equities, property, and even fixed interest securities which are subject, among other things, to inflation risk. It is indispensable for project investors to identify and manage the risks related to the investment.

Overview

In finance, investment is the purchase of an asset or item with the hope that it will generate income or appreciate in the future and be sold at the higher price.^[1] It generally does not include deposits with a bank or similar institution. The term investment is usually used when referring to a long-term outlook. This is the opposite of trading or speculation, which are short-term practices involving a much higher degree of risk. Financial assets take many forms and can range from the ultra safe low return government bonds to much higher risk higher reward international stocks. A good investment strategy will diversify the portfolio according to the specified needs.
The most famous and successful investor of all time is Warren Buffett. In March 2013 Forbes magazine had Warren Buffett ranked as number 2 in their Forbes 400 list.^[2] Buffett has advised in numerous articles and interviews that a good investment strategy is long term and choosing the right assets to invest in requires due diligence. Edward O. Thorp was a very successful hedge fund manager in the 1970s and 1980s that spoke of a similar approach.^[3] Another thing they both have in common is a similar approach to managing investment money. No matter how successful the fundamental pick is, without a proper money management strategy, full potential of the asset cannot be reached. Both investors have been shown to use principles from the Kelly criterion for money management.^[4] Numerous interactive calculators which use the Kelly criterion can be found online.^[5]
In contrast, dollar (or pound etc.) cost averaging and market timing are phrases often used in marketing of collective investments and can be said to be associated with speculation.
Investments are often made indirectly through intermediaries, such as pension funds, banks, brokers, and insurance companies. These institutions may pool money received from a large number of individuals into funds such as investment trusts, unit trusts, SICAVs etc. to make large scale investments. Each individual investor then has an indirect or direct claim on the assets purchased, subject to charges levied by the intermediary, which may be large and varied. It generally, does not include deposits with a bank or similar institution. Investment usually involves diversification of assets in order to avoid unnecessary and unproductive risk.

History

The Code of Hammurabi (around 1700 BC) provided a legal framework for investment, establishing a means for the pledge of collateral by codifying debtor and creditor rights in regard to pledged land. Punishments for breaking financial obligations were not as severe as those for crimes involving injury or death.
In the early 1900s purchasers of stocks, bonds, and other securities were described in media, academia, and commerce as speculators. By the 1950s, the term investment had come to denote the more conservative end of the securities spectrum, while speculation was applied by financial brokers and their advertising agencies to higher risk securities much in vogue at that time. Since the last half of the 20th century, the terms speculation and speculator have specifically referred to higher risk ventures.

Value investment

Business revolves around the factor of investing; financially, time, in the future and successful investors will generally focus on certain fundamental metrics for their gains. A value investor is aware that when considering the health of a company, the fundamentals associated with it, are a highly influencing factor. They include aspects related to financial and operational data, preferred by some of the most successful investors; for example, Warren Buffett and George Soros. The financial details, such as, earnings per share and sales growth, are essential aids for an investor in determining stocks trading below their worth.
The price to earnings ratio (P/E), or earnings multiple, is a particularly significant and recognized fundamental ratio, with a function of dividing the share price of stock, by its earnings per share. This will provide the value representing the sum investors are prepared to expend for each dollar of company earnings. This ratio is an important aspect, due to its capacity as measurement for the comparison of valuations of various companies. A stock with a lower P/E ratio will cost less per share, than one with a higher P/E, taking into account the same level of financial performance; therefore, it essentially means a low P/E is the preferred option.
An instance, in which the price to earnings ratio has a lesser significance, is when companies in different industries are compared. An example; although, it is reasonable for a telecommunications stock to show a P/E in the low teens; in the case of hi-tech stock, a P/E in the 40s range, is not unusual. When making comparisons the P/E ratio can give you a refined view of a particular stock valuation.
For investors paying for each dollar of a company's earnings, the P/E ratio is a significant indicator, but the price-to-book ratio (P/B) is also a reliable indication of how much investors are willing to spend on each dollar of company assets. In the process of the P/B ratio, the share price of a stock is divided by its net assets; any intangibles, such as goodwill, are not taken into account. It is a crucial factor of the price-to-book ratio, due to it indicating the actual payment for tangible assets and not the more difficult valuation, of intangibles. Accordingly, the P/B could be considered a comparatively, conservative metric.

Debt equity and free cash flow

For investment purposes, an essential factor relates to how a company finances its assets, especially if it involves a sizable value stock and is a situation in which debt/equity ratio has a significant influence. Similar to the P/E ratio, the debt/equity ratio, indicates the proportion of financing, a company has obtained from debt; for example, loans, bonds and equity, such as, the issuance of shares and stock, which vary between industries. An indication to investors that all is not financially sound with a company, relates to above-industry debt/equity figures, particularly if an industry is experiencing a challenging, adverse business environment.
A factor that sometimes remains unaware to investors is that the earnings of a company generally do not equal the amount of cash generated. This is due to companies reporting their financials utilising, Generally Accepted Accounting Principles (GAAP). It is a standard framework of guidelines for the financial accounting practices used in any given jurisdiction. International Financial Reporting Standards (IFRS) are commonly used, worldwide.
Free cash flow is a metric that determines for an investor the sum of actual cash remaining in a company after deduction of any capital investments. In general, it is preferable to for a company to boast a positive free cash flow, but similar to the debt-equity ratio, this metric assumes greater significance in a difficult business environment.

Basics of the profit line

Arguably, the most commonly utilized valuation metric is Earnings Before Interest, Tax, Depreciation and Amortization, generally referred to as “EBITDA.” This metric relates to the basic profits made, prior to the influences and intricacies of accounting deductions becoming issues of the true profit line of a company. This particular metric is recognized as the primary standard of private mergers and acquisitions.
For a company competing in a high growth industry, an investor could expect a significant acquisition premium, which is a buyout offer, several times over the most recent EBITDA. In various instances, it has been known for private equity firms, to pay multiples of up to 6-8 times the EBITDA. However, some buyers could make the decision that even given these relatively high valuations, the offer from a buyer does not take into consideration past expenditures and future potential product growth.
In certain cases, an EBITDA may be sacrificed by a company, in order for the pursuance of future growth; a strategy frequently used by corporate giants, such as, Amazon, Google and Microsoft, among others. This is a business decision that can impact negatively on buyout offers, founded on EBITDA and can be the cause of many negotiations, failing. It may be recognized as a valuation breach, with many investors maintaining that sellers are too demanding, while buyers are regarded as failing to realize the long-term potential of, expenditure or acquisitions.

Thursday, June 4, 2015

ACCOUNTING SOFTWARES

Joseph Barabara, Shareholder of Barabara Associates Ltd

Dear Esteemed and prospective Customers,
Currently we are working with the below listed Organization on the development of accounting systems.

TEWOREC
SHIDEPHA
TALISDA
TAWODE
CVS

Sunday, April 26, 2015

How to Invest

Whether you have 20 or 200,000 to invest, the objective is the same: to make your money grow. The means, however, vary dramatically based on your available money and your investing style. Invest effectively and you could conceivably live off of the earnings from your investment!

Part 1 of 4: Setting Yourself up for Success1

Build your emergency fund. If you don't have one already, it's a good idea to focus your efforts on setting aside 3 to 6 months of living expenses just in case — i.e. an emergency fund. This is not money that should be invested; it should be kept readily accessible and safe from swings in the market. You can split your extra money every month, sending part of it to your emergency fund and part of it to your investing fund.
- Whatever you do, don't tie up all of your extra money in investments unless you have a financial safety net in place; anything can go wrong (a job loss, an injury, an illness) and failing to prepare for that possibility is irresponsible.
Pay off any high-interest debt. If you have a loan or credit card debt with a high interest rate (over 10%) there's no point in investing your hard-earned cash. Whatever interest you earn through investing (usually less than 10%) won't make much of a difference because you'll be spending a greater amount paying interest on your debt
- For example, let's say Sam has saved 4,000 for investing, but he also has 4,000 in credit card debt at a 14% interest rate. He could invest the 4,000 and if he gets a 12% ROI (return on investment — and this is being very optimistic) in a year he'll have made 480 in interest. But the credit card company will have charged him 560 in interest. He's 80 in the hole, and he still has that 4,000 principal to pay off. Why bother?
- Pay off the high interest debt first so that you can actually keep any money you make by investing. Otherwise, the only investors making money are the ones who loaned it to you at a high interest rate.
Write down your investment goals. While you're paying down any debt and building your emergency fund, you should think about why you're investing. How much money do you want to have, and in what period of time? Your goals will affect how aggressive or conservative your investments are. If you want to go back to school in three years, you'll want to play it safe with your money. If you're saving for retirement as a 30-year-old, you can afford to roll the dice a bit more. In short, different investors have different goals. These goal affect their investment strategy. Are you looking to:
- Hold onto money so that it's just above inflation?
- Have money for a down payment in 10 years?
- Build a nest egg for retirement many years in the future?
- Build a college fund for a child or grandchild?
Determine whether you want a financial planner. A financial planner is like a coach who knows the playbook: they know what plays to call in what situations, and what outcomes to expect. While you don't need a financial planner in order to invest, you'll quickly realize that having someone who knows market trends, studies investment strategy, and diversifies your portfolio is a very good person to have on your team
- Expect to pay your financial planner either a flat fee or anywhere from 1% to 3% of your total money under management. So if you're starting with 10,000, expect to pay 300 annually. Be aware that many top financial planners will only advise clients with portfolios in excess of 100,000, 500,000, or $1 million.
- Does this arrangement seem like a lot to shell out for advice? It may at first blush. But not when you realize that good financial planners help you make money. If a financial planner takes 2% of your 100,000 portfolio but helps you make 8%, you're netting roughly 6,000. That's a pretty good deal.

Part 2 of 4: Mastering Investing Basics

Know that the riskier the investment, the higher the potential payoff. That's because investors demand higher payoffs for taking greater risks — very much like an odds maker. Very low-risk investments, like bonds or certificates of deposit, usually come with very little return. The investments which offer the highest returns are usually much riskier, like penny stocks or commodities. In short, very risky bets carry with them a high chance of failure and a low chance of fantastic returns, while very conservative bets carry a low chance of failure and a high chance of small returns.
Diversify, diversify, diversify. Your investment egg is perpetually at risk of shriveling up and dying with improper management. The goal is to keep it alive for long enough so that it gets plenty of opportunities to grow and multiply. A well-diversified portfolio limits your exposure to risks so that your investments have the necessary time to create real gains. Professionals diversify both the types of investments they own — stocks, bonds, index funds — and the sectors they invest in.
- Think of diversifying like this. If you own only one stock, your entire fate is in the hands of how well it performs. If it performs well, then good; but if it doesn't, you're screwed. If you have 100 stocks, 10 bonds, and trade in 35 commodities, you're better set up for success: if 10 stocks were to fail, or all of your commodities were to suddenly become worthless, you'd still weather the storm.
Always buy, sell, and invest for a definable reason. Before you decide to invest one penny, lay out the reason(s) why you're choosing the investment that you are. It's not enough to see a stock steadily gaining over the past three months and want in on the action. That's gambling, not investing; you're relying on chance instead of following a strategy. The most successful investors always have a theory about why their investments are in good position to succeed, even if the future is uncertain.
- For example, ask yourself why you're planning on investing in an index fund like the Dow Jones. Go on. Why? Because betting on the Dow is essentially betting on the American economy. Why? Because the Dow is a collection of 30 leading US stocks. Why is that good? Because the American economy is recovering from recession and major economic indicators look hopeful.
Invest — in stocks, especially — for the long run. A lot of people look at the stock market and see the opportunity to make a quick buck. While it's certainly possible to make a killing on stocks in a short time, it's not very likely. For every person who makes a lot of money investing for a very short time, 99 lose a lot of money in a very short time. Again, when you pump money into an investment for only a short period of time hoping for a monster return, you're speculating instead of investing. It's only a matter of time before speculators make a bad call and lose it all.
- Why is day-trading on the stock market not a strategy for success? Two reasons. Market unpredictability and fees.
- The market is essentially unpredictable in the short term. Timing what a stock is going to do on a daily basis is next to impossible. Even great companies with excellent prospects can have down days. Where the long-term investor has the upper hand over the short term investor is predictability. Stocks have historically returned about 10% in the long-term. You can't be nearly as certain that you'll return 10% during any given day. So why risk it?
- Each buy or sell order also comes with fees and taxes. Simply put, investors who buy and sell every day incur way more fees than investors who just let their pot of money grow. Those fees and taxes add up, eating into any profits you may reap.
Make investments in companies and sectors that you understand. Invest in what you understand, because you're better positioned to know when it's doing well and when it's not. A corollary of this is something that the famous American investor Warren Buffet once said: "...buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will." Some of the famous investor's best-returning assets include companies like Coke, McDonald's, and Waste Management.
Hedge. Hedging is the equivalent of an investment backup plan. Hedges are meant to offset losses by investing in the scenario you don't want to happen. It sounds counter-intuitive to simultaneously bet for and against something, but if you think about it, it substantially lowers your risk, and lower risk is good. Futures and short selling are great hedging options available to the investor.
Buy low. Whatever you choose to invest in, try to buy it when it's "on sale" — that is, buy when no one else is buying. For example, in real estate, you'll want to purchase property when it's a buyer's market, which is when there is a large number of houses for sale in relation to the number of potential buyers. When people are desperate to sell, you have greater room for negotiation, especially if you can see how the investment will pay off when others don't.
- An alternative to buying low (since you never know for sure when it is low enough) is to to buy at a reasonable price and sell higher. When a stock is "cheap," such as 80% or more below its 52 week high, there is always a reason. Stocks don't drop in price like houses. Stocks typically drop in price because there is a problem with the company, whereas houses drop in price not because there is a problem with the house, but because there is a lack of overall demand for houses.
- When the entire market drops, however, it is possible to find certain stocks that fell simply because of an overall "sell-off." To find these good deals, one must do extensive valuations. Try to buy at a discount price when the valuation of the company shows its stock price should cost more.
Weather the storms. With more volatile investment vehicles, you may be tempted to bail. It's easy to get spooked when you see the value of your investments plummet. If you did your research, however, you probably knew what you were getting into, and you decided early on how you were going to approach the swings in the marketplace. When the stocks you hold plummet in price, update your research to find out what is happening to the fundamentals. If you have confidence in the stock, hold, or, better yet, buy more at the better price. But if you no longer have the confidence in the stock and the fundamentals have changed permanently, sell. Keep in mind, however, that when you're selling your investments out of fear, so is everyone else. Your exit is someone else's opportunity to buy low.
Sell high. If and when the market bounces back, sell your investments, especially the cyclical stocks. Roll the profits over into another investment with better valuations (buying low, of course) and try to do so under a tax shelter that allows you to re-invest the full amount of your profits (rather than having it taxed first). In the U.S., examples would be 1031 exchanges (in real estate) and Roth IRAs.

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