Recent Articles

Financial Risks

Financial risks range from having adequate capital to deal with the business dynamics to proper accounting and reporting of financial performance. These risks can be easily controlled via proper funding to eliminate the capital issues and using well educated and trained staff to deal with the accounting and reporting requirements. The goal of financial accounting and reporting is reliance on the tenant of accounting which states: “Good information input maximizes the probability of good information output for the decision aspect of business operations”. In effect, it is difficult for the owner of a small business to make good decisions without the proper information. An owner can by accident make a good decision with poor information. It is highly unlikely but remotely possible.

Financial Leverage in Real Estate

01/04/2017

Financial leverage refers to using a third party’s money to increase profit for the borrower.  In real estate the profit or equity in the property is the weight being lifted by the use of a lever (borrowing money) on the fulcrum (the [...]

Vertical Integration in Business

12/20/2014

Vertical integration in business refers to the process of gaining control over more steps of the product production stream.  Whenever a business obtains or can greatly influence any one of these steps along the process of producing and selling a [...]

Internal Rate of Return (IRR)

09/16/2014

Internal Rate of Return or IRR is the value rate earned on investment made by the company with its working capital.  In the small business world, this form of financial investment evaluation has little to no value.  Allow me to restate this: [...]

How Much is a Fair Profit? Part III of V – Risk

03/31/2013

A third factor in determining a fair profit percentage is risk.  Risk is divided into two types.  The first is insurable and the second is uninsurable risks.  Insurable risks are mitigated and have very little to no effect on the profit formula [...]

The Basic Principles of a Partnership

02/10/2013

A partnership is a form of a business entity that provides many more advantages than any other form of business entity.  There are several basic principles of a partnership that once understood, the reader can use to his advantage in the small [...]