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Financial Statement Analysis for Sales and Marketing Executives

While it is not necessary to be a qualified accountant to design a Strategy for Sales Perfection, a basic understanding of what is involved in financial analysis is essential for anyone in sales and marketing. It is too enticing, and often too easy, to use “blue skies” thinking in planning sales and marketing activities. It is even easier to spend money without fully realizing the return one is getting for it. It is critical that sales and marketing executives be more disciplined and analytical in the way they go about planning, executing and evaluating the sales and marketing plans and strategy. One way of introducing more discipline into the process is by having a basic understanding of the financial implications of decision making, and how financial measures can be used to monitor and control marketing operations. The purpose of this text is to provide exactly that, and the first chapter deals basically with an introduction to the activities involved in financial analysis.

The Income Statement

The P&L (profit and loss) statement otherwise known as the income statement is illustrated below. This is an abbreviated version as most income statements contain much more detail, for example, expenses are typically listed based on their individual.

G/L ledger account:

The income statement measures a company’s financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities. It also shows the net profit or loss incurred over a specific accounting period, typically over a fiscal quarter or year. The income statement is also known as the “profit and loss statement” or “statement of revenue and expense.”

Sales – These are defined as total sales (revenues) during the accounting period. Remember these sales are net of returns, allowances and discounts.

Discounts – these are discounts earned by customers for paying their bills on tie to your company.

Cost of Goods Sold (COGS) – These are all the direct costs that are related to the product or rendered service sold and recorded during the accounting period.

Operating expenses – These include all other expenses that are not included in COGS but are related to the operation of the business during the specified accounting period. This account is most commonly referred to as “SG&A” (sales general and administrative) and includes expenses such as sales salaries, payroll taxes, administrative salaries, support salaries, and insurance. Material handling expenses are commonly warehousing costs, maintenance, administrative office expenses (rent, computers, accounting fees, legal fees). It is also common practice to designate a separation of expense allocation for marketing and variable selling (travel and entertainment).

EBITDA – earnings before income tax, depreciation and amortization. This is reported as income from operations.

Other revenues & expenses – These are all non-operating expenses such as interest earned on cash or interest paid on loans.

Income taxes – This account is a provision for income taxes for reporting purposes.

The Components of Net Income:

Operating income from continuing operations – This comprises all revenues net of returns, allowances and discounts, less the cost and expenses related to the generation of these revenues. The costs deducted from revenues are typically the COGS and SG&A expenses.

Recurring income before interest and taxes from continuing operations – In addition to operating income from continuing operations, this component includes all other income, such as investment income from unconsolidated subsidiaries and/or other investments and gains (or losses) from the sale of assets. To be included in this category, these items must be recurring in nature. This component is generally considered to be the best predictor of future earnings. However, non-cash expenses such as depreciation and amortization are not assumed to be good indicators of future capital expenditures. Since this component does not take into account the capital structure of the company (use of debt), it is also used to value similar companies.

Recurring (pre-tax) income from continuing operations – This component takes the company’s financial structure into consideration as it deducts interest expenses.

Pre-tax earnings from continuing operations – Included in this category are items that are either unusual or infrequent in nature but cannot be both. Examples are an employee-separation cost, plant shutdown, impairments, write-offs, write-downs, integration expenses, etc.

Net income from continuing operations – This component takes into account the impact of taxes from continuing operations.

Non-Recurring Items:

Discontinued operations, extraordinary items and accounting changes are all reported as separate items in the income statement. They are all reported net of taxes and below the tax line, and are not included in income from continuing operations. In some cases, earlier income statements and balance sheets have to be adjusted to reflect changes.

Income (or expense) from discontinued operations – This component is related to income (or expense) generated due to the shutdown of one or more divisions or operations (plants). These events need to be isolated so they do not inflate or deflate the company’s future earning potential. This type of nonrecurring occurrence also has a nonrecurring tax implication and, as a result of the tax implication, should not be included in the income tax expense used to calculate net income from continuing operations. That is why this income (or expense) is always reported net of taxes. The same is true for extraordinary items and cumulative effect of accounting changes (see below).

Extraordinary items – This component relates to items that are both unusual and infrequent in nature. That means it is a one-time gain or loss that is not expected to occur in the future. An example is environmental remediation.

The Balance Sheet

The balance sheet provides information on what the company owns (its assets), what it owes (its liabilities) and the value of the business to its stockholders (the shareholders’ equity) as of a specific date. It is called a balance sheet because the two sides balance out. This makes sense: a company has to pay for all the things it has (assets) by either borrowing money (liabilities) or getting it from shareholders (shareholders’ equity).

Assets are economic resources that are expected to produce economic benefits for their owner.

Liabilities are obligations the company has to outside parties. Liabilities represent others’ rights to the company’s money or services. Examples include bank loans, debts to suppliers and debts to employees.

Shareholders’ equity is the value of a business to its owners after all of its obligations have been met. This net worth belongs to the owners. Shareholders’ equity generally reflects the amount of capital the owners have invested, plus any profits generated that were subsequently reinvested in the company.

The balance sheet must follow the following formula:

Total Assets = Total Liabilities + Shareholders’ Equity

Each of the three segments of the balance sheet will have many accounts within it that document the value of each segment. Accounts such as cash, inventory and property are on the asset side of the balance sheet, while on the liability side there are accounts such as accounts payable or long-term debt. The exact accounts on a balance sheet will differ by company and by industry, as there is no one set template that accurately accommodates the differences between varying types of businesses.

Current Assets – These are assets that may be converted into cash, sold or consumed within a year or less. These usually include:

Cash – This is what the company has in cash in the bank. Cash is reported at its market value at the reporting date in the respective currency in which the financials are prepared. Different cash denominations are converted at the market conversion rate.

Marketable securities (short-term investments) – These can be both equity and/or debt securities for which a ready market exists. Furthermore, management expects to sell these investments within one year’s time. These short-term investments are reported at their market value.

Accounts receivable – This represents the money that is owed to the company for the goods and services it has provided to customers on credit. Every business has customers that will not pay for the products or services the company has provided. Management must estimate which customers are unlikely to pay and create an account called allowance for doubtful accounts. Variations in this account will impact the reported sales on the income statement. Accounts receivable reported on the balance sheet are net of their realizable value (reduced by allowance for doubtful accounts).

Notes receivable – This account is similar in nature to accounts receivable but it is supported by more formal agreements such as a “promissory notes” (usually a short-term loan that carries interest). Furthermore, the maturity of notes receivable is generally longer than accounts receivable but less than a year. Notes receivable is reported at its net realizable value (the amount that will be collected).

Inventory – This represents raw materials and items that are available for sale or are in the process of being made ready for sale. These items can be valued individually by several different means, including at cost or current market value, and collectively by FIFO (first in, first out), LIFO (last in, first out) or average-cost method. Inventory is valued at the lower of the cost or market price to preclude overstating earnings and assets.

Prepaid expenses – These are payments that have been made for services that the company expects to receive in the near future. Typical prepaid expenses include rent, insurance premiums and taxes. These expenses are valued at their original (or historical) cost.

Long-Term assets – These are assets that may not be converted into cash, sold or consumed within a year or less. The heading “Long-Term Assets” is usually not displayed on a company’s consolidated balance sheet. However, all items that are not included in current assets are considered long-term assets. These are:

Investments – These are investments that management does not expect to sell within the year. These investments can include bonds, common stock, long-term notes, investments in tangible fixed assets not currently used in operations (such as land held for speculation) and investments set aside in special funds, such as sinking funds, pension funds and plan-expansion funds. These long-term investments are reported at their historical cost or market value on the balance sheet.

Fixed assets – These are durable physical properties used in operations that have a useful life longer than one year.

This includes: Machinery and equipment – This category represents the total machinery, equipment and furniture used in the company’s operations. These assets are reported at their historical cost less accumulated depreciation.

Buildings or Plants – These are buildings that the company uses for its operations. These assets are depreciated and are reported at historical cost less accumulated depreciation.

Land – The land owned by the company on which the company’s buildings or plants are sitting on. Land is valued at historical cost and is not depreciable under U.S. GAAP (generally accepted accounting principles).

Other assets – This is a special classification for unusual items that cannot be included in one of the other asset categories. Examples include deferred charges (long-term prepaid expenses), non-current receivables and advances to subsidiaries.

Intangible assets – These are assets that lack physical substance but provide economic rights and advantages: patents, franchises, copyrights, goodwill, trademarks and organization costs. These assets have a high degree of uncertainty in regard to whether future benefits will be realized. They are reported at historical cost net of accumulated depreciation.

Current liabilities – These are debts that are due to be paid within one year or the operating cycle, whichever is longer. Such obligations will typically involve the use of current assets, the creation of another current liability or the providing of some service.

Bank indebtedness – This amount is owed to the bank in the short term, such as a bank line of credit.

Accounts payable – This amount is owed to suppliers for products and services that are delivered but not paid for.

Wages payable (salaries), rent, tax and utilities – This amount is payable to employees, landlords, government and others.

Accrued liabilities (accrued expenses) – These liabilities arise because an expense occurs in a period prior to the related cash payment. This accounting term is usually used as an all-encompassing term that includes customer prepayments, dividends payables and wages payables, among others.

Notes payable (short-term loans) – This is an amount that the company owes to a creditor, and it usually carries an interest expense.

Unearned revenues (customer prepayments) – These are payments received by customers for products and services the company has not delivered or for which the company has not yet started to incur any cost for delivery.

Dividends payable – This occurs as a company declares a dividend but has not yet paid it out to its owners.

Current portion of long-term debt – The currently maturing portion of the long-term debt is classified as a current liability. Theoretically, any related premium or discount should also be reclassified as a current liability.

Current portion of capital-lease obligation – This is the portion of a long-term capital lease that is due within the next year.

Long-term Liabilities – These are obligations that are reasonably expected to be liquidated at some date beyond one year or one operating cycle. Long-term obligations are reported as the present value of all future cash payments. Usually included are:

Notes payables – This is an amount the company owes to a creditor, which usually carries an interest expense.

Long-term debt (bonds payable) – This is long-term debt net of current portion.

Deferred income tax liability – GAAP (generally accepted accounting principles) allows management to use different accounting principles and/or methods for reporting purposes than it uses for corporate tax fillings to the IRS. Deferred tax liabilities are taxes due in the future (future cash outflow for taxes payable) on income that has already been recognized for the books. In effect, although the company has already recognized the income on its books, the IRS lets it pay the taxes later due to the timing difference. If a company’s tax expense is greater than its tax payable, then the company has created a future tax liability (the inverse would be accounted for as a deferred tax asset).

Pension fund liability – This is a company’s obligation to pay its past and current employees’ post-retirement benefits; they are expected to materialize when the employees take their retirement for structures like a defined-benefit plan. This amount is valued by actuaries and represents the estimated present value of future pension expense, compared to the current value of the pension fund. The pension fund liability represents the additional amount the company will have to contribute to the current pension fund to meet future obligations.

Long-term capital-lease obligation – This is a written agreement under which a property owner allows a tenant to use and rent the property for a specified period of time. Long-term capital-lease obligations are net of current portion.

Statement of Cash Flow

The statement of cash flow reports the impact of a firm’s operating, investing and financial activities on cash flows over an accounting period.

The cash flow statement shows the following:

How the company obtains and spends cash

Why there may be differences between net income and cash flows

If the company generates enough cash from operation to sustain the business

If the company generates enough cash to pay off existing debts as they mature

If the company has enough cash to take advantage of new investment opportunities

Segregation of Cash Flows

The statement of cash flows is segregated into three sections: Operations, investing, and financing.

Cash Flow from Operating Activities (CFO) – CFO is cash flow that arises from normal operations such as revenues and cash operating expenses net of taxes. These include:

Cash inflow: is the positive influx of funds from (1) positive revenue from sale of goods or services (2) interest from indebtedness and (3) dividends from investments.

Cash outflow: is the negative (payments) most commonly categorized as (1) Payments to suppliers (2) payments to employees (3) payments to the government (4) payment to lenders (5) payment for other expenses.

Cash Flow from Investing Activities (CFI) – CFI is cash flow that arises from investment activities such as the acquisition or disposition of current and fixed assets. These include:

Cash inflow is the receipt of cash from (1) the sale or disposition of property, plant or equipment (2) the sale of debt or equity securities or (3) lending income to other entities.

Cash outflow is the payment of (1) the purchase of property plant and equipment, (2) purchase of debt or other equity securities, or (3) lending to other entities,

Cash flow from financing activities (CFF) – CFF is cash flow that arises from raising (or decreasing) cash through the issuance (or retraction) of additional shares, or through short-term or long-term debt for the company’s operations.

Financial Statement Analysis

Vertical Analysis

Analyzing a single period financial statement works well with vertical analysis. On the income statement, percentages represent the correlation of each separate account to net sales. Express all accounts other than net sales as a percentage of net sales. Net income represents the percentage of net sales not used on expenses. For example, if expenses total 69 percent of net sales, net income represents the remaining 31 percent. Vertical analysis performed on balance sheets uses total assets and total liabilities for comparison of individual balance sheet accounts.

Horizontal Analysis

Horizontal analysis is the comparison of data sets for two periods. Financial statements users review the change in data much like an indicator. Optimistic analysts look for growth in revenue, net income and assets in addition to reductions in expenses and liabilities. Calculating absolute dollar changes requires the user to subtract the base figure from the current figure. Expressing changes with percentages requires the user to divide the base figure by the current figure, and multiply by 100.

Trend Analysis

Review of three or more financial statement periods typically represents trend analysis, a continuation of horizontal analysis. The base year represents the earliest year in the data set. Although dollars can represent subsequent periods, analysts commonly use percentages for comparability purposes. Users review statements for patterns of incremental change representing changes in the business in questions. Financial statement improvements include increased income and decreased expenses.

Ratio Analysis

Ratios express a relationship between two more financial statement totals, and compare to budgets and industry benchmarks. Five common categories of ratios exist: liquidity, asset turnover, leverage, profitability and solvency. Reviewing ratios for performance compared with prior periods or industry specific benchmarks provides financial statements users with recognition of strengths and weaknesses.

Limitations

Analyzing financial statements presents an opportunity for reviewing past data and possibly budgets. However, the data used is historical in nature, indicating it may not be a good representation of the future due to unforeseeable circumstances. Market value of assets and liabilities can be under or overstated significantly leaving statement users unaware of the real value of a balance sheet. Pro forma statements, or forward-looking financial statements, provide estimates at best resulting in speculation.

Cost-Volume-Profit

Cost-volume-profit analysis provides owners and managers with an understanding of the relationship between fixed and variable costs, volume of products manufactured or sold and the profit resulting from sales. The financial relationship includes contribution margin analysis, break-even analysis and operational leverage. Financial statements provide the data to perform cost-volume-profit analysis.

Contribution Margin

Contribution margin analysis allows managers to look at the percentage of each sales dollar remaining after payment of variable costs, including cost of goods, commissions and delivery charges. Managers and owners use this analysis to help determine the pricing, mix, introduction and removal of products. Contribution margin analysis also aids managers with determining how much incentive to use for sales commissions and bonuses. Comparing each product offered affords the opportunity to look at product profitability and product mix.

Break-even

Break-even analysis considers the sales volume at which fixed and variable costs are even. Owners and managers must consider two primary figures when calculating the break-even. First, gross profit margin, which is the percentage of sales remaining after payment of variable costs. And fixed costs, including administration, office and marketing. Financial statements provide both sets of data necessary to calculate the break-even volume.

Operational Leverage

Every business model contains slightly different operating leverage, which compares the amount of fixed costs to sales. Businesses with higher fixed costs will experience a larger multiplier in their operating leverage, indicating less sales growth results in more profit. However, the same is true for losses, where small reductions in sales exponentially increase net losses. Less operating leverage results in less growth of net income.

Financial Ratios

A financial ratio expresses a mathematical relationship between two or more sets of financial statement data and commonly exhibits the relationship as a percentage. Profitability, solvency, leverage, asset turnover and liquidity comprise the five standard ratio categories. Managers and owners should review the ratios period over period, determining where unfavorable trends exist. After reviewing trends, benchmark ratios against industry standards, which managers can acquire from a variety of sources including industry-specific organizations.

A financial ratio (or accounting ratio) is a relative magnitude of two selected numerical values taken from an enterprise’s financial statements. Often used in accounting, there are many standard ratios used to try to evaluate the overall financial condition of a corporation or other organization. Financial ratios may be used by managers within a firm, by current and potential shareholders (owners) of a firm, and by a firm’s creditors.

Ratios can be used to judge the organization’s “liquidity”, i.e. can it pay its bills, its “leverage”, i.e. how is it financed and its “activities”, i.e. the productivity and efficiency of the organization. Taking liquidity analysis only, this has a bearing on new product planning, marketing budgets and the marketing decisions.

Financial analysis can be used to serve many purposes in an organization but in the area of marketing it has four main functions:

Gauge how well marketing strategy is working (situation analysis)

Evaluate marketing decision alternatives

Develop plans for the future

Control activities on a short term or-day to-day basis.

Understanding a company’s financial performance is critical to developing a solid Strategy for Sales Perfection as well as being an educated and well informed company executive. The purpose of this discussion is to introduce you to the concepts and points of analyzing financial statements and using ratios to develop informed business decisions. The information discussed in this chapter in no way will substitute the job function of your CFO or your CPA.

Financial statements can be quite complex and accounting principles may have significant effect on the way they are reported. Understand that a coordinated dialogue with your accounting staff is critical to obtain clear and concise knowledge of your company financial statements. Financial ratios have limitations and specific uses if interpreted properly. Attention should be given to the following issues when using financial ratios:

A reference point is needed. To be meaningful most ratios must be compared to historical values of the same firm, your company forecasts, or ratios with similar companies.

Most ratios by themselves are not highly meaningful. They should be viewed as indicators, with several of them combined to draw on a conclusion of the purpose of the analysis.

Take into account seasonal factors and business cycles when using financial ratios. Average values should be used when they are available.

Communicate with your accounting department to understand their philosophy and accounting principles.

Sales and Profit Ratio Model

Several profit models have been introduced over the years to gauge the performance of a company and to build a statistical measure to peak performance. We have developed a very simple model that measures four critical areas of performance: gross profit margin %, net profit margin %, RONA – return on net assets, and GMROI – gross margin return on inventory. Earlier in the chapter, we introduced a set of financial statements of which we will use the data from those as part of our illustration of the Sales and profit model.

Sales

COGS – cost of goods sold

Operating expenses – net of depreciation, amortization and interest charges

Fixed assets – property plant and equipment net of depreciation

Current assets

Current liabilities

Inventory

Net Income – after tax income

This model can be set up in an excel spreadsheet to keep track and measure the company’s progress in attaining peak sales performance; monthly tracking should be supported to insure constant improvements. These four ratios are the best measure of a company’s overall sales performance and should be compared to others in your industry to attain top performance standards.

Gross Margin Return on Inventory (GMROI) is a “turn and earn” metric that measures inventory performance based on both margin and inventory turnover. In essence, GMROI answers the question, “For every dollar carried in inventory, how much is earned in gross profit?” GMROI can be calculated at the organization level and, if the proper data is collected at the item level, all the way down to an individual item.

To set a benchmark for the organization, use either current financial statements or budgets for the future. Calculate the GP %, ITO and compute the existing or target GMROI. Measure every appropriate segment against this target. You will identify groups that are exceeding the targets and also those that are not pulling their own weight. While most organizations have some “loss leaders”, it is important to understand which items/groups that are under-performing. Choices are to live with the performance, improve the margin, improve the turnover or in extreme cases, discontinue the poor performing product.

Break-Even Profit Analysis

In business and economics, break-even analysis is a commonly used practice to set pricing multiples or price indexes. Companies need to use break even analysis to determine many relevant factors when designing a strategy for sales perfection. In the linear “cost-volume profit analysis”, the break-even point in terms of units (X) can be directly computed in terms of total revenue (TR) and total costs (TC) as:

The relationship between gross profit margins and sales revenue is approximately a 3.5 to 1 ratio. Simply stated, if you reduce your margin by 1/2 percentage point (.5%) you will need to raise your revenue by 1.7% to maintain the same amount of gross profit. Look at the table above which clearly illustrates this concept, now compare this illustration to your own company. Let’s assume your company has total revenue of $45,000,000, a reduction in margins of a half percent (0.5%) would require you to raise revenue to $48,375,000 to maintain the same amount of income. Your objective as an executive inside your company is to improve your company’s financial position.

Our website winning sales strategy and our book “Strategies for Sales Perfection: In the New Economy provide detailed analysis and explanations of this information along with a plethora of additional resources to allow your company to succeed during these this new economic recovery period.

Strategies for Sales Perfection: In the new Economy is a book written to help company executives develop a plan to support growth. to learn more visit our website at winning sales strategies.com

Successful Home Business Tips – Why We Have Two Ears & One Mouth

A lot of you would probably be wondering what am about to say. Like the title states, am going to give you some tips on how to run a successful home business online.

You will want to keep reading my successful home business tips to find out more.

Now, over to the reason why God gave us two ears and one mouth. This is because we will need to spend more time listening than actually talking. God has used this to emphasize the importance of listening (ears). And that is the main reason why over 97% of people fail in running a successful home business online. An old wise man once said to me, you can’t learn when you are always talking. Even in the classroom we need to pay attention in order to get what we are been taught.

Now you know one successful home business tips.

As an online home business owner, you need to listen to two groups of individuals.

1. The first are those people already ahead of you in the business and are earning income and

2. Your clients.

Except if you are experience in the business, you can omit this first group of people. Otherwise, you would want to learn from those who are more skillful in your line of trade. You need to carefully go through the steps this professional outline for you as well as put it into action. You will discover that you need to pay more attention to what this expert has to say than talking. It will also go a long way in saving you unnecessary research as well as expense.

The second set of people to listen to are you client. Most big corporation is aware of this powerful strategy that they go to the extent of conducting surveys pertaining to their product. All because they know what people think about their product and what are the things to do to improve them.

If you are running an online home business and you keep receiving mails from your clients concerning a particular area of your products, maybe pricing, poor customer service and so on. You will be able to know where to make adjustment to improve your sales.

Running your business and leaning onto your own understanding will only limit your success. Sometimes you need to listen to what others have got to offer and if it’s makes sense. You can be running a successful home business online if you know how to use this strategy.

There you have one of the most reliable successful home business tips.

Internet Marketing Business Tips For a Successful Start

Like the name of the business states “internet marketing business”, it is certainly going to involve marketing and lots of it too. Marketing on the internet is an entirely different ball game, in this internet marketing tips, we are going to take a look at what you need to be successful.

1. The first thing you are going to need is online marketing skills, you can succeed in this business matter how you have to throw around so long as you don’t have marketing skills. Except if you outsource your marketing campaign. Here you will be faced with the challenge of finding the right information as well as putting it into practice. The best place to source for your marketing info is the search engines and forums. You will need to take your time to properly go through the search engines result for better info. Once you find an “online marketing forum” sign up with them and make your post and ask any question regarding to marketing on the internet. You will also find many threads on internet marketing business tips by simply searching the forum.

2. You can barely do without a site of your own. With a site of your own, you are take advantage of all the major free traffic methods and also tracking your visitors which is vital to your success.

3. Marketing on the internet is entirely different from the real world. It requires a lot of time to start seeing positive result. You will need to be patience and hard working to succeed in this game. Many people come and leave when they don’t get quick result and not knowing how close they are to success. Consistency is vital to be a successful internet marketer.

4. While having money to spend is not a MUST but it will certainly go a long way in help you achieve success with your business as well as speed up the whole process.

5. You have to be smart because the learning process is quite tricky, people who have trouble reading and absorbing often have difficulties applying what they have learnt. The way you think can also have a positive impact on your business.

6. If the road gets bumpy, you can always hire a mentor to put you through. Most of the successful online marketers today, got to the position they are through the help of a mentor.

If you follow this internet marketing business tips, you won’t have trouble getting started on the right path.

To Your Success,

John Benjamin

Financial Freedom Radio – Do You Know What You Don’t Know?

Financial education is lacking in the general public with even people who have degrees in finance and business being financially uneducated. The “ostrich syndrome” is alive and well in the financial world and that is where these institutions want you to be.

Financial education is something that the masses don’t have and because of the lack of it they end up becoming slaves to the financial institutions. Lumped into this category are the people who have degrees in business and finance. Just because an individual has formal education in finance it doesn’t mean that they are financially educated. They have been educated by the teaching institutions into the ways of the financial institutions.

Any person who has financial education, and educated by a teaching institution has been educated to leave the teaching institution and get a job within an industry and assist in making that company within the particular industry stronger. If they are not an asset then they have no value to the institution they are employed by. So all of the financial education is pro-business!

Translate this to the financial industry and look at the financial education that people receive by the teaching institution; it is pro-financial institution. How do the financial institutions make their money? They make their money on the backs of the consumer, by selling products to the end user. The consumer is the end user! You see anything that makes one group stronger will make the other group weaker. So what makes the financial institutions stronger makes the consumers weaker, because the financial institutions make their money selling products to the consumer. They must “extract the cash” from the consumer in some way or another and justify it as right.

So all of these financial planners and advisors are trained by the teaching institutions to make the financial institutions stronger and if they fall down on the job they get fired. The financial institutions operate under four basic rules;

  1. They must get your money.
  2. They must get your on a systematic and on going basis.
  3. They must hang on to it as long as possible.
  4. They must give it back as little as possible.

If these financial institutions violate these rules they are out of business. Therefore they have to get the consumers money, so doesn’t it make sense that the financial information that they sell to the public, is pro-financial institutions. Take a look around and survey what you do financially. I bet that the majority of the financial things that you do, are centered around the financial institutions in some fashion or another. Sometimes everything that is being done revolves around the financial institution in some way or another, and the financial institution get fees and charges from the consumers in almost everything they do.

Is the majority of your financial activity focused around the financial institutions? If you answered yes than regardless of your financial education, you are financially uneducated. Regardless, of your financial education if you are fueling the financial institutions you are working for them and all of you financial education has guided you right to them. I have worked with clients who think they know it all financially, and end up losing huge sums of their hard earned cash.

If everything that the financial institutions were doing was right then people would not be out living their hard earned money. They would be wealthy beyond dreams. But unfortunately the gains are taken by the financial institutions and little is given to the consumer. I have heard plenty of supposedly highly educated people defend these practices even though they were losing. Usually the people defending these strategies are the people who work for the financial institutions. Don’t get me wrong financial institutions have their place but it’s not fleecing the public.

Actually if you have no financial education you are better off because you have no preconceived financial notions. You are an empty canvas to be painted on and will find it easier to make shifts in thinking. Financial Freedom Radio is conducting a series on “Why You Should Be Rich”, you can listen live to this series of download past episodes. The show is Friday 9:00 AM EST. You can also download to you i-Pod through i-Tunes for free. Simply go to Podcast and type in “Financial Freedom Radio”.

What You Need to Know About Finding the Best Internet Business Tips Online

Do you know that the Internet is simply loaded with so many online business tips that are openly shared on websites and forums? If you know how to separate the wheat from the chaff, you’ll be able to accumulate a wealth of Internet business tips to help you get started on your own e-commerce enterprise.

Most of these tips focus on Internet marketing, as well as other methods of making a living from the web. Learning how to do so may take quite a bit of your time, but once you have gathered a fair amount of this advice, it will all be worth it when your online business finally sees the success of your preparation.

If you take a look through the Internet, you will find a whole slew of websites promoting such-and-such webpage that will show you the secret of making millions off the web, or so-and-so online marketing guru who will teach you how to become wealthy off the Internet. Unfortunately, there is one big secret these sales pages and online business gurus don’t want you to know: you won’t be able to make a single cent if you don’t purchase their products.

Remember, anyone who is determined to do so can make money from the Internet. While you may want to sell a product or promote a service to earn a tidy profit, there are still a whole lot of Internet business tips you will find that will help give you ideas about the most ideal niches to go into, how to plan out an Internet start-up, and how to build up your online business each day with effective tools and methods to get your business noticed and to get massive traffic to your website.

There is cash to be found online, and if you work at it hard enough by building your Internet business up each day, you will eventually find success. Devoting time and honest effort into your enterprise will always see positive results. Whether you are into article marketing, blogging, posting videos, or utilizing forums and business groups online, you will find all you need and put what you have learned to work at growing your e-commerce empire.

One thing you should never do is get distracted by all the non-essential sites that litter the Internet, such as social networking sites, for example. Make use of them for online marketing purposes to build your business, but wasting hours chatting or playing games can be very unproductive and take away time that would be better spent gathering Internet business tips to enhance your online income efforts. While it can be important to build up your network, make it schedule your time so that it will redound to the benefit of your business in the long run.

The good thing about putting all you learn from the Internet through a sieve is that you are refining all this knowledge, information, tips, and advice for the purpose of improving your own online enterprise. The Internet is a beehive of perfectly sound data, but you will have to find out which ones you need, and which ones deserve the trash bin.

If you are realistic enough to have set your business goals earlier on, and are enthusiastic about achieving your dream of having a successful online business, you’ll be able to accomplish a great deal with your best efforts and learn all you need to know about building a profitable business on the Internet.