5 Personal Finance Rules Every Small Business Owner Should Live By

5 Personal Finance Rules Every Small Business Owner Should Live By

Many small business owners struggle to manage their organization’s finances. Rather, they focus on their business’s core operations while placing accounting and other administrative tasks on the back burner. Unfortunately, this often leads small business owners down the path for failure by adopting the following personal finance rules, however, small business owners can better manage their business’s finances and increase their chances of success.

#1) Create an Emergency Fund:

Even if they never use it, small business owners should create an emergency fund. It’s impossible to predict the future. Even if a small business is currently turning a profit, factors like market changes, industry regulations or consumer demand can quickly place a business in the financial red zone. By creating an emergency fund, small business owners will have peace of mind knowing that they stay afloat during times of hardship.

#2) Choose Debt Wisely:

There’s nothing wrong with borrowing money, but small business owners should choose their debt wisely. High-interest loans, for instance, can hurt a business’s profits. In addition to paying the principle, the borrower must also pay interest. A small business owner should only take a loan or debt if he or she can comfortably pay it back according to the lender’s terms.

#3) Keep Excellent Financial Records:

Small business owners should keep excellent financial records for bookkeeping and tax purposes. If a small business owner doesn’t know exactly how much money his or her business spends and earns, they won’t be able to optimize their operations for higher profits. Whether it’s performed in-house or outsourced to a professional accountant, proper bookkeeping is essential to the success of all small businesses.

#4) Plan for Taxes:

Waiting until April to review taxes for the year prior is never a good idea. As a small business grows, it will earn more income and, subsequently, be required to pay more taxes. To avoid the sticker shock of an expensive tax bill, small business owners should plan for taxes in advance. This means setting aside the necessary funds — usually about 35 percent of income — for their taxes. In most cases, small business owners must make quarterly estimated payments to the Internal Revenue Service (IRS) based on the projected income for the year, and failure to make these payments will result in a penalty.

#5) Plan for Retirement:

Retirement isn’t something that most small business owners think about when initially launching their business. As most financial experts know, however, the sooner you begin planning for retirement, the better. Even if a small business owner doesn’t have employees, he or she can still set up a retirement plan using a Simplified Employee Pension (SEP).

The same rules used for personal financing can also apply to small businesses. By incorporating the rules mentioned here into your small business’s operations, you’ll build a more stable foundation that allows your business to expand without the traditional growing pains experienced by so many others.

Yorkville Advisors, LLC is a privately owned and operated hedge fund sponsor that was founded in 2001.

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Why Investing in Penny Stocks is Never Profitable

Why Investing in Penny Stocks is Never Profitable

The lure of cheap stocks offering high rewards often appeals to many inexperienced investors who want to quickly generate high returns. However, cheap stocks, also known as penny stocks, are extremely volatile and sometimes dangerous. Penny stocks have been known to wipe out many new investors’ entire portfolio. Here is a closer look at penny stocks and why they are almost never profitable.

What is a Penny Stock?

Investors refer to penny stocks as companies whose share price trades below $1.00. The SEC considers companies that trade below $5.00 as penny stocks. These companies typically have no market capitalization and no profits. Companies with such a low share price normally trade on the over-the-counter stock markets and on the pink sheets. These stocks can go days without any market activity and no trading volume. Often times these stocks have very wide bid/ask spreads and no liquidity. The most successful investors almost always stay away from such volatile stocks.

Finding the “Next Big Thing”

It is not uncommon for investors to scour through countless penny stocks hoping to find the next Apple or Google. The lure of getting a “piece of the action” can lead investors into a dangerous game that puts their portfolios at risk. The chances of finding the “next big thing” in penny stock listings are the equivalent of finding a needle in a haystack. Most finance experts agree that researching penny stocks for the next Amazon is a waste of time, and investors should use that time to learn how to invest in the stocks of companies trading on the major market averages.

Little to No Liquidity:

Most penny stocks have little to no liquidity, which makes them very difficult to trade. Many inexperienced investors might think they are getting a deal when they buy a company’s stock for $.10 or less per share. However, when it is time to sell those shares, those investors might have a hard time finding buyers. Additionally, companies with little liquidity are targets of stock manipulators who like to “pump and dump” those shares.

For example, fraudulent brokerage houses or traders will pump up the stock with the false promise of some major breakthrough while simultaneously buying a significant amount of shares, which then causes the price of the stock to rise. Once the stock reaches a certain price, those same brokers or traders will then sell their shares of stock at huge profits while regular investors are stuck with worthless stock.

Yorkville Advisors, LLC is a privately owned and operated hedge fund sponsor that was founded in 2001.

Is PPC or SEO Better For Your Business?

Is PPC or SEO Better For Your Business?

If you’re trying to improve your business’s visibility and to turn potential leads into customers, you’ve got two primary options these days: Pay-Per-Click marketing or Search Engine Optimization. There are similarities between these methods, but they vary wildly in terms of cost and immediate efficacy.

PPC vs. SEO: The Facts You Need to Know:

First, let’s take a quick look at the basics of PPC and SEO marketing strategies.

Pay-Per Click Marketing:

The pay-per-click model of online marketing is based around a simple concept: advertisers pay a small fee each time a potential customer clicks on one of their ads. You probably see many of these ads each day–they feature a small box in the right-hand corner displaying the word “ad.”

This obviously sounds like an optimal model to draw visitors to your site, but it can quickly become expensive, especially if you’re not converting these leads into sales. There are also many companies that prefer to generate their leads in a more organic fashion.

Despite Google’s relatively new advertising format, which displays ads in conjunction with less expensive (even free) organic results, people have gotten wise. They are much more likely to click on the regular search engine results, which is where SEO comes in.

Search Engine Optimization:

Search Engine Optimization (SEO) is the name for a group of strategies used to increase your business’s rank in Google results (as well as other search engines). Let’s say you operate a pizza place in New York; one of the most common SEO techniques is to research keywords to use on your website that will place you optimally within the results for, say, “best pizzeria in Brooklyn” or “inexpensive Brooklyn pizza”.

While PPC can yield results fairly quickly, SEO is more of a long-term strategy to build (and maintain) a web presence. It takes time and experimentation to find the right keywords to highlight your business, as well as to build a database of high-quality content that will keep customers browsing, leading them ultimately to a purchase.

Important Points to Remember:

Depending on your business strategy, Pay-Per-Click Marketing might be advantageous. This is especially true if you’re trying to generate leads quickly. PPC, while effective, is best used by companies who have larger marketing budgets. It behooves any company to have a great website that encourages maximum lead conversion–after all, you’re paying to get people there!

If your budget is more modest, SEO is a better long-term strategy. As a matter of fact, SEO is a good idea even if you’re engaging in PPC marketing. Keep in mind that SEO is a slower-moving process.

In the end, the best strategy is to find the mix of PPC (for lead generation) and SEO (to improve your website and search results) that works for you. It’s a matter of budget, time preference, and how urgently you need to drive leads and potential customers to your site.

Yorkville Advisors, LLC is a privately owned and operated hedge fund sponsor.

How to Choose the Perfect Business Partner

How to Choose the Perfect Business Partner

The right business partner is instrumental to a successful business venture. Where would Google be today if Larry Page didn’t meet Sergey Brin? What would Apple be if not for the partnership between Steve Jobs and Steve Wozniak? Yet while some partnerships click instantly, not all entrepreneurs are lucky enough to find the perfect business partner from day one. Below are four tips to help you find and vet your potential co-founder candidates.

Figure out What Type You’re Looking For:

Are you looking for someone who can throw facts and figures or someone who can come up with new creative angles and ideas? Do you need someone to help you figure out the bigger picture? Perhaps someone who can handle the business side while you focus on the technical aspects of your product or service? Knowing what type of business partner to look for beforehand makes it easier and more straightforward to filter through potential candidates. Business partners come in all packages, with some being skillful talkers who can negotiate their way into advantageous positions while others are more of a visionary who can come up with revolutionary and out-of-the-box ideas.

Tap Into Your Circle of Coworkers:

One of your past or present coworkers could be the business partner you’re looking for. Not only is this convenient, but tapping into your circle of coworkers can also give you a tremendous advantage compared to choosing a co-founder you only met yesterday. You already know or at least have a basic idea of how a past or present coworker operates. You know if they are hardworking or lazy, if they are honest or dishonest, and if they have the drive and passion or not. Send prospective co-founders a text or email or meet up with them to discuss your business idea. Only confide with people who you completely trust otherwise they might steal your idea for themselves.

Consider Partnering With a Family Member:

You always hear cautionary tales of business owners and entrepreneurs who partnered with a family member and failed. Nonetheless, there are many advantages to partnering with a close family member, one of which is that it helps you precisely identify value alignment. Sharing values is arguably one of the most essential factors that drive entrepreneurs to achieve incredible feats, take great risks, and make difficult sacrifices. That being said, working with a family member is a delicate process. While you are connected by blood, make it clear from the beginning that it’s all business.

Try it out:

You can try out your newfound partnership for a few weeks or months and see how it goes. An even more short-term solution is to start a small side project with your prospective co-founder. It takes only a few discussions with him/her to get a strong sense of whether or not the partnership has a foundation and future.

Final Thoughts:

Choosing the perfect business partner takes time and some trial and error in many cases. Nonetheless, it is a major decision that will have a tremendous impact towards your business’ long-term success.

 

Yorkville Advisors, LLC is a privately owned and operated hedge fund sponsor that was founded in 2001.

How to Finance a New Car

How to Finance a New Car

Financing a new car is a major purchase for most people. The average car might cost between $10,000 and $30,000, depending on the make and model. You want the best deal for your dollar. Before you step up to the sales desk, take a close look at how you can finance a vehicle with a fair cost. There are realities in the dealership world that must be evaluated beforehand.

Focus on the Car’s Total Cost:

Car salespeople enjoy the power of numbers. They’ll quote you a low, monthly payment to draw you in. This practice is widespread and smart on the part of the dealership. However, you need to focus on the car’s total cost. The low, monthly payment may equate to a huge price on the car with some multiplication involved.

Negotiate the vehicle’s cost or “out the door” price. From this number, you can consider a finance package that suits your budget. The total cost tells you exactly what you’re receiving, from the sports trim to the Bluetooth radio.

Keep the Term Short:

Financing a vehicle over six or seven years allows you to spread the payments out over a long, time period. It sounds attractive because you can buy more with a low payment. Don’t fall prey to this scenario, however.

Finance the vehicle for the shortest time possible. Three to five years is the normal range for the average buyer. This time frame works well because the car’s value should be at its midpoint by the time you pay it off. You don’t want a car that’s worth only a few thousand dollars, and you’re still paying a monthly payment for outright ownership.

Try Weekly Payments:

Every car loan is structured with a monthly payment. However, you don’t have to follow this plan as a strict rule. To reduce your payment period and possible interest costs, pay down the car loan in weekly installments. Go online, and pay part of the monthly charge. Pay more if possible.

Although car loans don’t typically have compounding interest, you get ahead of the payments with a weekly habit. Make sure you always cover the minimum required by the monthly due date, however. You don’t want to add penalties to the loan by overlooking the due date on a weekly schedule.

Get Pre-Approved:

The car dealership isn’t the only place where you can secure a car loan. Get pre-approved by your bank or another lender. They essentially guarantee a loan amount that’s funded once you find a vehicle. There’s a fixed, interest rate that can be negotiated at the dealership too. With good credit, finding a solid deal is possible with a bank backing your final loan.

You may feel obligated to agree to a finance agreement at the first dealership, but step back for a moment. There’s no obligation to buy anything until you sign the contractual papers. Feel free to leave if you experience too much pressure or the deal swings in the wrong direction. There are plenty of other dealerships to work with in today’s competitive market.

Yorkville Advisors, LLC is a privately owned hedge fund sponsor.

3 Personal Finance Habits Everyone Should Get Into

3 Personal Finance Habits Everyone Should Get Into

If you are struggling to save money, do not panic, because you are not the only one. According to statistics, more than 50 percent of Americans have less than $1,000 saved up. Around 30 percent of Americans have no money saved at all. While those numbers are scary, there are ways to improve your financial situation and start saving some money. Here are three personal finance habits that will help you start saving today.

Impulse Purchases:

Impulse purchases can wreck your savings account in a hurry. Statistics show that five out of six people in the U.S. are prone to impulse purchases. Additionally, almost 20 percent of people say they have spent more than $1,000 on an impulse purchase. A habit you can develop is to force yourself to wait at least one day before you make a nonessential purchase. By implementing this 24-hour cooling off period, there is a good chance you will realize you do not need the product or service in the first place.

Check Your Credit Report Often:

Unfortunately, many Americans avoid checking their credit reports and scores. Many people have no idea what their score is and how it can save them money. If you want real borrowing power in the future, make it a habit to check both your report and your score frequently. You are allowed one free credit report per year from all three of the credit reporting agencies in the U.S., TransUnion, Experian and Equifax. You can request a free copy of your reports by visiting AnnualCreditReport.com.

However, this report does not include credit scores. If you want your real credit scores, you can order them through all three agencies by paying a fee. Additionally, many credit reports contain errors. You can increase your score by having errors on your credit report removed.

Pay Your Bills on Time:

Another sure-fire way to increase your credit score is to pay your bills on time. Keep in mind that your payment history accounts for 35 percent of your credit score using the FICO-based scoring model. Your credit utilization ratio, which is how much available credit you use, accounts for 30 percent of your credit score. When you pay your bills on time, you are not only helping your credit, but you are avoiding those costly fees that come with late payments. Some lenders and credit card companies do not give you a grace period if you are running a little behind on your payments. The second you miss a payment by the scheduled due date, you are hit with late fees.

 

Yorkville Advisors, LLC is a privately owned hedge fund sponsor.

The Impact of Artificial Intelligence on Finance

The Impact of Artificial Intelligence on Finance

We’ve all heard about artificial intelligence when it comes to science fiction movies, but many people don’t realize that while it may sound futuristic, there have been significant inroads in the field within just the past few years. It’s not just in scholarly circles, either. Artificial intelligence has become a huge resource in the world of finance.

There’s Much More Data Out There:

With the emergence of the internet as a dominant force in the economy within just the past decade, more and more data is becoming available to the business and financial sector. We live in a digital world that is chock full of unorganized and scattered data. Artificial intelligence is up to the task of delivering that data in a meaningful and impactful way.

Computers Are Becoming Extremely Powerful:

This point is obvious to anyone who has a smart phone but it’s worth re-iterating when it comes to artificial intelligence and the financial world. As computers get more and more powerful, it becomes apparent that AI improves along with it. The next decade will show just how powerful AI algorithms can get.

What Can AI Actually Do Now?

It’s easy to jump in to a science fiction or fantasy mindset when talking about AI, but there are many real world applications of it available today that produce real returns. It can learn unsupervised when dealing with data clustering and statistical tools. It’s able to pick out patterns that may not be first viewable to the human mind.

It’s also capable of learning things under strict supervision. One of its benefits is hunting for specific types of data such as when it comes to credit-worthiness. It’s also capable of learning from mistakes by utilizing repetitive strategies and observing the sorts of returns they’re capable of.

Using Artificial Intelligence in Investing:

Some algorithms can be easily used to find the link between the prices on assets and different events that happen throughout the world. They can even be used to predict the movements markets make in advance based on social media. They can white list certain users in order to fight back false positives. This also makes them ideal for dealing with credit scores and other underwriting endeavors. With that being said, there are some challenges that come with utilizing artificial intelligence and plenty of room for advancements.

Dealing with Biases:

The usefulness of a particular artificially intelligent algorithm is going to be primarily based on the quality of data it’s allowed to analyze. Even with the most pristine sources, biases that may not even be known can be present and shape the findings in ways that aren’t useful. It also requires plenty of time and resources to accumulate such data sets in order to be used by the AI program. There’s also an issue with responsibility in case things go wrong.

Overall, artificial intelligence is a boon to the financial sector as long as it’s used by the right people making good, educated decisions about things.

 

Yorkville Advisors, LLC is a privately owned hedge fund sponsor.