Once you have made up your mind to be a business person next thing that strikes you is whether to start a new one on your own or buy an existing business. Both options are doable. Yet, buying an existing business seems to be an easy way out. Let us see the advantages of selecting this alternative.

1. Knowledge Bank: The first and foremost plus point is that you know the lay of the land as far as the business you intend to buy is concerned. You have details of financial, operating and marketing performance; you are appraised of its staff, customers, suppliers; you have ideas about its owners and bankers. You can get published information to corroborate what the present owners have tried to convey

2. No Sunk-cost: There is no need to re-invent the wheel; you are spared with time and money in setting up a new business and going through start-up stage ; you have no hassle of getting approvals and licenses; more than that your decision making is made much easier as you have to say yes or no

3. Ready-made: It is just like buying a ready-made suit that fits you well. When you buy an existing business you take not only the entity but everything connected with the entity. There are trained staffs attuned to the ground realities of the business; they are well equipped with systems encompassing various activities of business such as purchasing, operating, marketing, selling, billing, financing and so on. You take over a pool of customers who are time-tested and have above par credit reports. In addition, there are suppliers, reliable in honouring contracts. All these cascading benefits are of long term nature impacting your short term performance. On top of all, you are briefed on business trends and future scenarios by the owners and employees. At a given time this turns out to be your short-term asset that helps you capitalize it for long term survival

4. Business Reputation: The fourth advantage rests on reputation of the existing business. They have track experience and a name in the industry to go with. In common parlance it is known as goodwill. You buy a business associated with the kind of reputation in which it is recognized by the wider society

5. Price is creamy: Depending on how you negotiate you may end up with a big bargain if you buy a business at a stated value that is less than its market value; sometimes you may have to pay a premium price that is to pay more than the market value. In either case you get a worthy business in your hands

6. Finance available: Another key positive is that you can finance the purchase of an existing business much easily than getting money for a new start-up. Banks generally lend part of the purchase price when it changes hands. The existing bankers of a business are generally inclined to continue their relationship with the new buyer by supporting him

7. Foundation is laid: When you buy existing business you get one with solid foundation. What you have to is to build on this foundation. You can set the tone on product improvement, profitability enhancement, widening the customer base and diversifying capital sources in felicitous manner

8. No Down-time: Once you buy existing business you metamorphose as a business person overnight. There is no waiting time; absolutely no time is wasted either. You get into the hot seat sooner than later as per purchase agreement you sign up with the seller

9. Cash flows from day one: An excellent plus is the way cash-flow begins. You buy the business and immediately afterwards you see cash coming in, in correspondence with the business activities continuing unabated

10. Cosmics begin: Finally, as I say, cosmics commence to function making your life rewarding and profitable. You have chosen a business; it has its own cosmics. You are a business person and you have your unique cosmics, aspects residing within you shaping and influencing you though these are un-seen and un-noticed by you. Once you fuse both these cosmics you become a successful business guy.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

When you are in trouble, you are counselled “count your blessings”. To be grateful for the good things you have and stop badgering of the bad things you are beset with. What are the good things a business has given you? Let me name them one by one:

1. Grateful forever: Business gives you the sense of gratitude; you pay the salaries and wages to your employees; you file the tax returns regularly; you meet your obligations squarely and finally you reward yourself for the trouble you are taking in running the business

2. Lasting friendship: You traverse the friendship bridge. Everything you do in business is in good faith upholding noble virtues of friendship and team spirit. If you take one of these out your business flops. Alfred A Montapert put it succinctly: “All lasting business is built on friendship”.

3. Nothing but the truth: Earth has a core of minerals and melting fire; fruit has core of plum and seed. Likewise, business has a big core; not made up of metals or flesh; but with layers of truth. You strive to be truthful in all your dealings, which we call in plain word as integrity. In a small business integrity is the key strength. No surprise that John Greenleaf Whittier declared: “As a small businessperson, you have no greater leverage than the truth”.

4. Morality to the fore: Ethics and responsibility of business is a subject of debate after the Gulf fire caused by the British Petroleum (BP). US administration is now taking efforts to bring criminal action on the company’s miserable failure in not putting out the fire in timely fashion. For an ordinary business person morality shall remain the binding cord between him and people whom he associates with, in the conduct of his business. “Every young man would do well to remember that all successful business stands on the foundation of morality”, admonished Henry Ward Beecher. Morality, therefore, remains larger than life picture in your business

5. Winning Attitude: “Success or failure in business is caused more by the mental attitude even than by mental capacities”, says Walter Scott. Not a whit of doubt about it. So many guys with brilliant ideas enter the market but fail to make their mark and wither away. What is going wrong with them? Attitude, positive attitude. That is what they lacked. A sought after boon from your business is the kind of winning attitude where upon success is premised such that even if you run into snags you come out with a broad smile

6. Drive you Crazy: Pause for a moment; look at what business bestowed you now. The burning desire to do, to perform and to succeed. The coals never stopped smouldering within you. You go ahead whether rain or sunny. That is what keeps you in trim and shape, not the treadmill you work out in the evenings. Still you have to drive the business like a car or perhaps your wife. What happens if you don’t? B C Forbes gives the answer: “If you don’t drive your business, you will be driven out of business”

7. Grow tall & grow big: Looks like childhood stuff. Never mind. From toddler to kid; youth to middle aged you continue to grow; so must be your business. Unless you build up your business big and tall you leave no signature of yours. Will Rogers put it this succinctly: “If you can build a business up big enough, it’s respectable”. Your business gives you that dream; let the dream becomes a self-fulfilling vision

8. Never Stop running: Ostensibly, business makes you run in marathons. Success must breed further success. Any complacence skittles you off from your turf. You remain tethered to your business till you finish your marathon line and breast the red ribbon. Sample this from Thomas J Watson “Whenever an individual or a business decides that success has been attained, progress stops”

9. Cosmic Blessings: My final piece as always is to talk about how cosmics make you as a business person. I looked at what Thomas Carlyle has to say about cosmics. “ “Blessed is he who has found his work; let him ask no other blessedness”. See how pithy and philosophical the statement is. Cosmics are aspects hidden within you influencing you in your business life. If you can understand and evaluate your cosmics you can get into right business. When your cosmics are firing in all the cylinders, you wake up in the morning, feeling in high spirit as a triumphant business person.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Everybody has to take some risk somewhere at some time with something in his life. Prototyping business and career persons into risk taker, risk neutral and risk avoider is too mathematical and sounds theoretical. To succeed in life you have got to take risk. Let us see how taking risk can be made easy for you.

Imagine you are travelling in a speed train. A fellow passenger got stuck in the auto door in between two compartments. Someone must dislodge him from the door panels to get him extricated. If he remains there the chance of his being suffocated perhaps leading to fatality is high. If you attempt to stop the train unnecessarily you are subjected to a huge fine. What you will do?

1. Pull the alarm signal

2. Try to extricate the passenger with what you can, failing which you will alert the engine driver of the impending calamity and wait for instructions

3. You will cry out, get others involved, do everything you can, alert the engine driver and pull the alarm signal

What you do in this circumstance reflects your attitude for risk taking. If you have ticked off item one then you are an impulsive type of risk taker ready and willing to take risks on the spur of the moment and driven more by emotions than by intelligence. If you park on the second option, you are a cautious risk taker playing safe and taking no chance. The last option is chosen by a calculated risk taker. He thinks fast acts fast and gets cracking.

What makes you take risk?

Attitude to risk is influenced by many factors. Culture of person is chief amongst these. People who live in Northern Hemisphere are more prone to take risks, especially in Europe and North America. Traditional societies that value loyalty and obedience shun much of risk taking. Genetics on the other hand play a distinguished role. Chinese have traditional Confusion culture shaping their outlook and behaviour; we believe that it prods them to conform and comply and treads the beaten path. Nailing this myth, men and women from Hakka Caste amongst Chinese show remarkable ability to take risks and as a result they have emerged as the most successful community in the Chinese mosaic. Location is a key factor in the evolution of risk taking personality. Surprisingly city dwellers get spoofed by a crisis while their counterparts in off-city limits are far too adventurous. Upbringing also contributes in moulding risk taking. Families where strain of courage and bravery runs select armed forces as their major choice. General Patton and General MacArthur are noted examples. This can be further extended to occupation as well. Generally guys in the Navy will sink with their ships after letting others use the remaining lifeboats. Most deciding factor is cosmics that reside within each person influencing and shaping his life throughout. Observe a school teacher in her brooding moods and a college professor in cheery moods, both are in teaching profession, but, what makes one pensive and other sprightly is the work of their individual cosmics.

What taking risk can do for you?

You can hone your skills in risk taking if you are convinced what it can do for you. Here are few goodies you get:

1. Taking risks helps you to broaden your outlook, your horizon, and your space in managing events and people

2. You learn to use your emotion and intelligence equally well

3. It aids you in developing a strong personality and let you have a hanker for risk and uncertainty

4. You will not wilt under pressure but keep composed and calm

5. It marshals your power in directing your swirling mind to focus on the job at hand

6. You learn to make decisions quickly, cautiously or in calculated manner as demanded by the situation you are in

7. You tend to learn a new skill and get coached in new methods of doing business and career. Even at old age stockbrokers look ostensibly younger and smarter because they continue to be up and running in the bull and bear market

8. You get all three “ Es” in one go: that is education, experience and exposure

9. You will develop an analytical mind at the same time willingness to go through life challenges. More so in taking business risk

10. Finally, you develop your cosmics to give you that re-assuring aura; people tend to trust and admire those who never hesitate in taking appropriate risk as and when necessary.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Personal branding is packaging your unique personal features into a consolidated brand. This branding then turns out to be a valuable asset in your repertoire. Every person in business or career shall develop his own personal branding. As time goes on, you and your personal branding are perceived by the society as one and the same. Your unique personal branding is a sum total of one or more of the following aspects:

1. Personality Traits: It is all about how your personality attributes make the man you are. Will you think in silence and be an infighter like Leo Panetta or passionate and extrovert like General David Petraeus. Recently President Obama made a tactical change. He shifted General Petraeus to CIA and Leo Panetta to Pentagon. Obama read the future well. Obama has to season the 1. 4 million US Armed forces to be trained in future wars that require intelligent analysis and actions rather than mere bravado. Leo Panetta fits the bill. Contrarily, the present CIA has to be transformed as a fighting unit with covert operations in armed conflicts. None other than David Petraeus is suitable for this vocation

2. Character Mapping: Strength of character is a unique personal branding. When you remain unfazed on the face of crisis as General David Petraeus oversaw in Afghanistan and Iraq and later as the head of the U S Central Command you are singled out as a person having the grain of character mapping to be a leader. You must possess such vastness of character that can be can be summed up in a simple phrase: personal branding

3. Smile & Style: Frank Sinatra sang “Do it in my way”. In cinema and in real life he had his own style. His cigarette lighter never left him and was buried as a memento with him. He was too smash & bash to go without it. What about his smile. For yesteryear Cinema goers his smile held much allure and they still rock around to see his films even decades after these were originally made

4. Speech & Mannerism: Ronald Reagan had unique personal branding in speech and mannerism. He was an actor, swashbuckler and a great communicator. His choice of words and diction is legendary as his cinema and political career. He used jewelled phrases, sometimes pithy sometimes denigratory. In 1986 confronted with multiple terrorist actions by the fulminating Libyan leader Muammar al Qaddafi, Reagan used fighting words by calling him “The mad dog of Middle East”. In fact, it presaged his wisdom; years later Gaddafi was killed on the streets of Sirte in Libya echoing Reagan’s diatribe

5. Body Language: George Clooney displays his personal branding via his body language. His walk & gait, his sitting postures, the way he moves his head and the mischievous twinkle in his eye are examples of body language that seal his personal branding. Furthermore, as an accomplished actor he uses cadence and rhythm in his tone to orchestrate his body language. He is final embodiment of American cinema today. The point need not be laboured anymore; just look at any survey on eligible bachelors, George Clooney tops the list

6. Image Projection: Your image projection distinguishes you from countless others. Your image can vary according to your skills and attitudes. Positive attitude combined with mastery of inter-personal skills make you a hero amongst your colleagues, peers and subordinates. A proactive executive is a born leader while a manger with a laid-back approach could project the image of a back-room operator. If you act with tenacity born out of conviction you are deemed a social reformer. If nothing can swerve your loyalty to your boss you project as an indispensable aide. As you keep your sight on corporate missions and vision you will be appreciated as the best CEO. When you are consistent in conduct and move with your network in faith and harmony you have groundswell of support and admiration wherever you go. Any of these pointers in image projection can easily translate into your personal branding

7. Value Proposition: James Bond says: “Stir the martini and not shake it”. In the films even other characters accosting him repeat this mantra perhaps to taunt him or curry favour with him. What comes to my mind is the value perception James Bond brings, albeit, as a fictional character. Do it mildly and you shall win. You see the list of movers and shakers in commerce, entertainment and industry. Many of them are too mild to become shakers anyway.

8. Cosmics as Binding Twine: When you finish reading the seven aspects outlined above you cannot miss the central thread connecting people to these aspects. That is their cosmics. Each person has individual cosmics; hidden resources that reside within him shaping and influencing his personality, skills, attitudes, beliefs, conduct and host of others. Before you develop your personal branding you must understand your cosmics and leverage it in your business or career life because it is your cosmics that elicits perception and response on the part of others in dealing with you.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Receivable finance is a novel and non-conventional way of converting credit sales into cash. In USA it is known as receivable finance and in the British Commonwealth as factoring. The system basically collateralizes your credit invoices. Financial institutions dealing in commercial credit are front runners in this mode of activity. Let see what it can do for you:

How it works

You sign up with a financier an agreement to finance your trade receivables. Once a credit sale is made you generate a trade invoice, deliver the goods/service to the buyer and send the invoice to the financier after receiving the acceptance to, by the buyer who signs over the face of the invoice. It is concomitant on the seller that he deals with credit worthy buyers. These invoices are verified by the financier who will do a check on the credit worthiness of the buyer and discount the bill according to the agreed rate of interest and the net amount is credited to your account. Receivable finance takes various forms:

1) Recourse Finance: Under this method you are liable to pay the financier in case the buyer does not meet his obligations on due date

2) Non-recourse Finance: In this case any buyer default is absorbed by the financier who takes adequate payment insurance to cover any perceived default

3) Processing Debt Collection: In most cases financiers would undertake processing of the debt collection including recording debt, collecting payment, depositing cheques, generating reports, chasing debtors and do other follow-up activities. Some banks grant receivable finance without undertaking collection on their part

4) Quantum of Finance: Generally financiers grant full quantum of the invoiced value less the discounting charge which is pegged onto monthly interest rates. Banks such as HSBC use a method where they extend portion of the invoice value upfront and the balance after the buyers pay up less any discounting charge

5) Selective Debtors: Under this scheme the financier has the right to choose which invoices he will finance and which he will reject.

Pluses

1. Receivable finance converts paper into money; debtors into capital; sales into cash-flow. You get your credit sales as up-front cash, improving your business sales and prospects

2. This is more flexible arrangement than bank loans or bank overdraft/line of credit. You have no hassle in submitting financials, tax returns and various other statements that are called for in processing conventional finance applications. Moreover, there is no limit imposed by the financier on the amount you can raise

3. Under no-recourse finance you have no responsibility for the eventual payment by the buyer

4. Where processing debtors is on the part of financier you are relieved of all the paper work and trouble in going behind debtors

5. You can deal in open account by enlarging your business operations; advance payment and letter of credit or accommodation are no longer necessary

6. Most important, you have cash resource to make your purchases without credit terms; this helps in negotiating for concessionary prices and favourable terms of delivery from your creditors who supply you materials and services.

Minuses

1. Before you sign up on the dotted line of the Receivable Finance Agreement, you must read and understand what it tells about your responsibility, your liability; the way you will get your finance etc. You should distinguish between recourse and non-recourse methods; on quantum of finance, selection of debtors and collection of receivables by the financier. If you do not understand the receivable finance methodology you will regret later

2. You must first ask the question. Do I really need this money from the financier? Can you employ the cash-resources on useful matters or will it simply idle in a checking account

3. Cost of receivable finance is very prohibitive compared to conventional bank loans. Discount rates currently hover between 0.75 to 1.50 % for a 30 day period. When annualized it goes as high as 9 to 18%. Can you afford this cost?

4. Receivable finance is suitable for a business that is in start-up or in first level growth stages when they are cut away from conventional banks. Once a business moves into secondary level or growth area they have enough credentials and clout to negotiate with bankers who can offer more completive schemes in financing working capital

5. Receivable finance has worked successfully in few sectors such as health care services which are covered by national health schemes or corporate re-imbursement schemes. I have seen receivable finance doing excellently well in advertisement industry. But in many other industrial or commercial sectors it could be a big flop

6. Cosmics play havoc when you get into receivable finance. Many customers feel second rated when someone else other than the seller contacts them for payment or follow-up. Later they do not turn up to buy anymore. The troubling phenomenon is that receivable financing conveys to many that the seller is going through financial woes. Your initial euphoria of getting cash promptly evaporates afterwards when you see your customers turning their backs on you. You are aware cosmics are aspects that are within you shaping and influencing your business throughout. Weigh your cosmics and your need to go for receivable finance and make a trade-off.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Every business goes through business cycles in correspondence with the way economy expands or contracts. There are four or sometimes five phases of business cycle depending on how economy is doing. The business cycle is very much asymmetrical, that is, stages of the cycle are not equal in time duration. Whatever the duration is, a business has to go through each phases of business cycle with foresight. In doing so, it must think long-term and act short-term.

Business Cycles

The five phases of business cycles are:

1) Growth: Also known as Expansion

2) Boom: Alternatively known as Peak

3) Decline: Otherwise known as Depression or Recession

4) Bust: Synonyms are: Slump, Trough

5) Recovery: This phase is unique in that it either follows Decline or Bust phase

Characteristics of each phase and how business must respond to it is explained in details below:

1. Growth

Economy picks-up, so does business sentiments in the market. Consumer expenditure moves upward; corporate purchases jacked up in response. Business generally acts on the spur of the moment in enlarging the scope of operations and expanding business horizons. Some business can lurch out of control and swells its employees and grow helter skelter. Well managed ones get its act together and chalk out a recipe of success. Some tips:

Ø Plan out investment in technology and communication as you need this in the coming phase of boom

Ø Expand your market keeping an eye on how globalization, per se, will affect you. You have to be competitive in the local setting and if possible seek pastures abroad for your products

Ø Keep the cost down, finance pruned and your profit margin at reasonable level

Ø Develop your cosmics to work at the faster phase; cosmics are aspects residing in every person and as an extension in every business. Cosmics can arise in different ways. You have to understand cosmics and turn it to your advantages

2. Boom

Economy expands briskly and sometimes over-heated still triggers intermittent stimulus for business to beef up operations. So business blips up sales and purchases; hire more labour and commission new plants and machinery. Finance borrowing is at peak, so is the cash outlay on resources employed in both human and technical. You have twinkle in your eye as if Zeus has descended from Mount Olympus. Anyway you must have a sense of caution thus:

Ø You have to distinguish grain from the chaff; evaluate whether upscale is a seasonal one or cyclical one. Seasonal sales arise from holiday season and during summer; cyclical expansion in sales is a concomitant to economic cycle

Ø Ratchet things up a notch in new technology that you have acquired in the previous phase along with concerns for environmental issues; never neglect your responsibility in building up sustainable environment because as you come to the end of tether in boom cycle you badly need to keep progress at even keel

Ø Diversify your product line-up and markets. If you have concentrated on a single product change into multi track; you have to see new market opportunities. At the same time enhance product quality still more

Ø Get you cosmics to keep you in perfect balance without racking up wasteful expenditure

3. Decline

While economy shows signs of gradual bottoming up, overall progress in industry is stymied. Your business is unable to post big profits. You pitch your hope for a slow decline if your business is declining in relation to the economy. If you are getting into prolonged depression then you need to fear whether you can pull it over or you will be out of business soon. You must still be positive and take a safe assumption that the next stage is going to be recovery rather than slump. Tips are:

Ø Reduce overheads promptly; start negotiations with lenders on term loans and improve efficiency in purchases, inventory maintenance, sales and delivery

Ø Coach your employees on managing change so that they are well equipped in terms of attitude and skills in tackling an uncertain future

Ø Create some kind of buffer in money resources and get a life boat ready for any eventuality

Ø Cosmics can help in shaping your response to the incoming recovery, or in the worst case a bust

4. Bust

Economy totters and goes into slump. Many businesses shutter their doors. Everything appears gloomy. Should you follow suit and get lost? Far from it. Your business life must go on. You have to duke out the trough. My advice is you court success rather than embrace failure. Do the following;

Ø Becalm yourself and get going in business albeit in small scale

Ø Instead of retrenching employees ask them to work for lesser salary

Ø Check out for a major overseas buyer and come into terms with him for bulk sales; persuade your trade and finance creditors to give more time and canvass for emergency assistance from state; continue your good work in marketing

Ø Re-examine your cosmics to see how you can weather the storm

5. Recovery

Economy slowly emerges out of trouble. Business sentiments on rise, though, not to the level you saw during growth phase. Still there is light. Consumers are returning; sales are looking up. Advice:

Ø Put your business in first gear; get the budget process to check income and expenditure; prepare cash –flow on weekly basis

Ø Motivate your employees to meet up with the challenges in the business environment

Ø Fire in all cylinders and operate a fast track marketing campaign

Ø Follow what your cosmics say: You are a re-born business person

Cheers,

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Banks have gotten into a corner; from four sides they are being beleaguered, stay like a mouse in a trap. Roaring home prices on one side juxtaposed against slump in the home market in the opposite direction; skyrocketing of bank bad debts pitted against higher demand for mortgage finance on the part of home owners. Encompassed in this state banks have done what you expect them to do: tighten the rules on mortgage lending. Has this policy worked?

It has not. Many banks are reporting decline in mortgage loans approvals; overall earnings dipped in many banks. Citigroup, the U S giant is expected to post revenues in 2011 highlighting 30 % drop from the previous year. To revive banks must re-examine their policy and procedure of mortgage lending. Banks always balance their portfolio of loan assets in corporate lending as against personal finance. When one goes down other must go up. Now is the time to shift the bar of personal finance much lower. To do that, banks need to relax mortgage rules.

Matching loan to value with affordability

Conservative dictum of loan to value ratio (LAV) hovers between 60 to 75%. It means that a borrower will get a loan amount equal to this percentage of the value of the home he pledges. But there is a caveat he must be able to afford this amount. In other words the borrower must have the capacity to repay the amount he borrows. Matching loan to value and affordability has brought enough headaches to the banks. In New Zealand, acting on their own, banks upped the pole on LAV to 80 to 90% to encourage demand in mortgage loans. Banks in Hong Kong, on the other hand, were spurred to by their monetary authority to relax rules and increase the LAV. But in Britain LAV went haywire. Recent pronouncement of the UK Financial Services Authority (FSA) over mortgage rules brings out a telling example of banks violating the LAV prudence by granting loans at 125% of the LAV.

Equally important is to ensure banks assess affordability in a practical manner. The current practice of asking too much private details including listing of expenditure must be amended to a borrower-friendly regime of selective assessment. Household expenditure could be declared by the borrower in specific terms along with his take-home pay if he is an employed person. Self-certified income and expenditure can be allowed in certain cases. A thumb rule of 3 to 4 multiples of borrower annual revenue as loan quantum is in use globally. Still prudence must reign. FSA points out that in one instance a bank has gone up to seven times earnings of a borrower in granting a mortgage loan. In case there is revenue deficiency of servicing loan by a single borrower, banks should add his or her spouse as co-borrower and bring in the spouse’s income in calculating affordability. Some banks tend to act too conservative by insisting that the home to be mortgaged should also be in the joint name of borrowers. This entails legal cost and sometimes elicits disaffection from the original applicant. Another important issue is how to treat short term and long term debt declared by the applicant. Bundling together both short and long term outstanding by an applicant is morally wrong as mortgage lending is generally for a longer period. Therefore, banks need to look at the current long term debt of the applicant and decide on his affordability, leaving aside short term debt arising from credit card outstanding.

Re-mortgaging the future

After servicing personal finance, borrowers tend to ask for additional loans by doing a re-mortgage. In addition to the primary mortgage that exists, they require secondary and tertiary mortgages. If banks allow LAV of 80% on the primary mortgage the next tranche can go up to 90% and the next till it reaches 100% of LAV. Additional funding is generally tied to the future value of the property. There is no harm in extending additional mortgage, but this must not be done purely on expectation of future value. Piggy back riding on future home value has been the cause of property bust in Hong Kong. Learning lesson from real estate bust and boom cycle, banks should take up a defensive posture in assuming interest rate going up in future and in that context whether the borrower can service the additional finance cost conveniently. One way to mitigate the situation is to checkout borrower’s future income. At all cost re-mortgage by borrowers to maintain lush lifestyle must be axed.

Classifying borrowers and Credit Reports

Borrowers are classified according to credit reports and on need basis. Every bank gets a credit report of an applicant from a credit information bureau or agency. Un-paid outstanding of debt could bring credit score down. Let alone bad or miserable credit score, even poor score is frowned upon by banks. Recently approved U S “Home Affordable Refinance Programme (HARP)” advises banks to ignore slight blemish in credit report and urges that if an applicant is current in paying mortgage instalments during last six months, he be allowed to avail additional finance. On the basis of need, banks in New Zealand prefer first home buyers from others. Banks in Britain have predilection for right-to-buy tenants who apply for finance. Home movers and applicants for buying additional homes are rated low in terms of need and do not qualify for concessions.

Cosmics play a role….

For a bank as well as borrower cosmic balance is a must. When a borrower gulps up more than what he can chew he gets more worries; likewise over-exposure to a particular borrower also gives worries to a bank. Both bank and borrower must learn to have cosmic balance. Cosmics are aspects that are beyond facts & figures but still influence the conduct of personal finance between bank and borrower.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Recent spat between France and Turkey after the former passed legislation criminalizing denial of Armenian Genocide has brought chaos in both countries. Surprisingly, business in both countries has risen to the occasion to bring a sense of balance and took steps to normalize the otherwise contentious situation.

On the road to chaos

Every now and then, countries spar themselves which is considered normal in diplomacy. Globally, it is a standard practice to agree to disagree. We know about the separation of power in democratic countries comprising of Legislature, Executive and Judiciary branches. A parliament of a country has sovereign right to pass legislation. But when such legislation is passed at the behest of the executive arm to spite another country then there is a crisis. Moreover, a parliament can pass a legislation commenting and naming an incident as bad in law; but when it oversteps and makes it a criminal offence to deny such incident it is arbitrary, to say the least.

Historians are still debating about massacres that took place in Eastern Turkey in 1915 when both Armenians and Turks were killed as invading forces from Russia were being resisted. Some historians consider the massacre as perpetrated by the Turks. On the other hand quite a number think contrarily and concede both Turks and Armenians were killed by Russians and their agents. Whatever the opinion is, it is best left to the historians to establish a truth commission and find out what exactly happened instead of blaming one against the other.

France passed a law in 2001 describing the incidents happened in 1915 as Armenian Genocide. In December 2012, its legislature passed a law that imposes a penalty of Euro 45,000 on a person who denies such genocide. There are 600,000 Armenians living in France whereas Turkish diaspora is about 40,000 only. The president of France, Sarkozy is facing election next year and he wants to get the Armenian support. Hence, he has instigated the passing of this piece of noxious legislation.

In its wake….

This brought huge spat between two countries. Turkey took several measures in retaliation. Recalling its ambassador, cancelling mutual meetings, cancelling military concessions granted to France on its soil. Beside these administrative measures, Turkey has unveiled economic measures. A voluntary boycotting of French goods is a business measure the Government urged on the public. In the finance field Turkey has a potent weapon. Turkish Central Bank has foreign reserves parked in Europe. The largest reserves of Euro 23 billion is held in French Government bonds. If Turkey shifts it to another country, invariably Germany Foreign Exchange stability of France can dip. In this chaotic situation politicians in both countries are doing nothing to avert a looming crisis. Ostensibly, saner counsel prevails in business circles in both countries. They express a voice of reason.

Business as saviour

Jean Lamierre and his Turkish counterpart Hasan Colegoglu, chamber presidents of France-Turkey Business Council, sprang into action. They ensured that everything is normal and business is as usual. The powerful Turkish Business Association TUSAID also intervened when its lady president Umit Boyner urged caution on the part of Turkey to be realistic and take the situation in its stride. They cannot be wrong. Look at the statistics. Turkey is France’s sixth largest import buyer; yet in terms of volume it is about 1.3 % of French exports. On the other hand, France is Turkey’s fifth largest import buyer; in terms of volume it is about 6% of Turkish exports. In value terms the mutual trade between France and turkey is estimated as 15 billion US $. Trade balance favours France with about 1 billion US$ as evidenced in Turkish exports to France at US$ 7 billion and its imports from France at US$ 8 billion.

Apart from trade, investment also works in a skewed manner. About 250 French companies operate in Turkey; you can easily spot the best French firms in Paris as well as in Istanbul. Notable amongst them are: Carrefour, Lafarge, Alcatel, Peugeot and Renault. Automaker Renault alone employs 6,000 people and operates the largest plant outside France. The total investment of French business in Turkey exceeds US$ 8 billion. Turkish investment into France is sizeable but does not exceed 1 Billion US$. About 35 big time Turkish companies have opened doors in France. Conglomerate Zorlu Holding and automaker Orhan Holding are key players. The latter employs about 460 people in France

Cosmics help keep balance

Turkey with a growth rate of 8% is second only to China today. Its booming economy, its export friendly policy, and its young and able workforce cannot go into drains due to political chaos. France is already tottering and next in line to go down in the Euro crisis. A sober assessment is the need of the hour. That has come from business, because only business understands how to keep a balance. Common sense along with cosmic balance can keep the economic ship sailing. Ignoring cosmics bring out in its wake economic imbalance, rhetoric and knee-jerk measures. Once again business in France and Turkey demonstrate that politicians bungle, gamble and ignore their mutual cosmics but only business can save the countries from impending chaos.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Whether you are in business or in career, you will have some kind of liquid assets with you. At different occasions you will be asked to declare your liquid assets. For example, when you are completing your credit card application or filling the form for personal or business finance. Therefore, it is better you get a hang of what are liquid assets.

Liquid Assets Explained

You have assets such as bank balance or real estate. Fine. When you begin to dispose the assets you find bank balance can be withdrawn on demand whereas real estate takes quite some time for its disposal. You got it right. Primarily, liquid assets can be disposed of quickly and with ease. This aspect is known as negotiability. Secondarily, such disposal must not reduce the capital amount you hold. In other words the sale value and the market value must be one and the same. Your bank balance of X amount can be withdrawn as X amount unless the bank imposes any service charge. However, in the case of real estate when you dispose you will do so discount to the market, which is sale value less than the market value. So bank balance is a liquid asset while real estate is not.

Type of Liquid Assets

On the basis of scale of liquidity I am jotting down several types of liquid assets, to enable you to take right decision in making and disposing investment:

1. Cash-in-hand: This relates to currency & coin that you have in possession. This is the most liquid ones you have. In every country the national currency is the legal tender while currencies from other countries are known as Foreign Exchange holdings. Foreign currencies are converted to local currency via Foreign Exchange market. Generally

U S Dollar is the base foreign currency for international travel and transactions

2. Cash-at-bank: You can have cash at bank in a savings account or a checking/current account. Balance in the latter can be withdrawn on demand or by writing a cheque. Generally, savings account balance can be withdrawn on demand, but some banks such as HSBC restricts the withdrawals to once a week

3. Un-utilized balance in Debit card: Any balance not withdrawn so far from your debit card is ranked third in our liquidity scale. You can swipe it anywhere or present over the counter and draw out money. I must caution you about an erroneous impression many of you have about credit cards. Unlike debit card, credit card has no liquidity in-built. It only helps you to finance your purchases out of the issuer’s money and not yours

4. Mutual / Unit Trust fund: Your mutual/unit trust account is ranked next in the liquidity scale. You can give notice generally one day, and withdraw an amount from mutual / unit trust account that lie to your credit. However, if you wish to take out the full amount your account need be closed prior to such withdrawal

5. Money Market fund: Similar to the mutual in terms of liquidity, money market funds differ in terms of volume and value. Generally, you are required to give notice before effecting any withdrawal

6. Surrender /Cash value in Life Insurance Policy: As you continue to pay your premiums on the life insurance policy, it collects a pool of money and after a certain period it begins to be marked as surrender or cash – value. This amount can be readily withdrawn or be pledged to a lender for a personal finance

7. Treasury Bills: Though Treasury Bill is considered as a guild edged investment with high degree of liquidity it suffers from a snag. Depending on the market movement for short term funds it will be quoted either premium or discount to market value. Good times you get premium; bad times you get discount. Hence, there is an equal chance of losing part of the capital stated on the face of the bill

8. Government Bonds: Similar to Treasury bills in price movement; yet, Government bonds do so in wide margin. Assuming you got the bond at 5% interest rate and the current rate of interest is 7% then the bond’s capital value will be reduced. Never the less Government bonds give you safety, guarantee and above all liquidity

9. Liquid Shares in Stock Market: Although there is huge volatility in the stock market, any shares that you hold which is traded frequently in the market can be counted as liquid asset

10. Amount due to you via Legal / Admin process: This is the last item in our liquidity portfolio. If there is any court order for damages payable to you or any award made say in the case of partition tantamount to be a liquid asset arising from legal process. In similar fashion business persons sometimes get grants or tax refunds that are construed as liquid asset arising from administration process.

Before you make an investment in or dispose of any liquid assets, you must ensure that you maintain cosmic balance. Cosmics are aspects that are beyond facts & figures but still influence the conduct of your finance and investment; cosmics reside in every individual and by extension in everything he is engaged in generating finance. If you understand your cosmics you can develop a right mix of liquid assets in your portfolio.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/

Whatever business you are engaged in, your success depends on a single most factor: Business Location. You would have read about several businesses shuttering their doors after few months of existence due to location issues. Choosing the right business location is a sine quo non in business process. Here are ten tips for doing that:

1. Traffic: As you know traffic relates to the number of people visiting and walking around a location for business transactions, window shopping or just for fun. Out of the traffic a certain percentage gets translated into real business transaction. The rest creates a pool of admirers or by-the-mouth promoters who spread good word around about a location. This helps business generally in building clientele. Hence, you must examine the quantum of traffic before you zoom in at a location

2. Business Potential: Evaluate economic trends in and around the area where you wish to locate. Is the area growing in terms of economy? It is no point you locate your business in places where there is no apparent growth. Still more important is the volume of business that is being done in the locality. For example, New York remains the best dreamed for location for any type of business

3. Area: Ascertain what kind of area you are getting in. If you go for hustle and bustle the location must be in the centre of city where you have more business rolling in. If you prefer silence and serenity an exclusive location gives you that added feel. Day to day business needs a location where several businesses are located in same area bringing more traffic and more deals. On the other hand if you are running wholesale business or industrial products you must search for a location in the periphery of city

4. Convenience: This is a multi-faceted factor. You have to appraise whether the location offers convenience to your employees, customers / clients, suppliers and the public. Convenience depends on several issues, chiefly, ease of approach to the location, conducive environment and availability of alternate routes in case of any emergency. Customers prefer to do business where they feel comfortable. For example they prefer a business that provides adequate parking facility with security

5. Transport: This factor relates to goods moving to and fro the business location. If you do not have a separate warehouse your current business location must be fitted with a store that is equipped to receive and despatch goods. When bulk good arrives from a supplier you need sufficient facilities to un-load, sort out and store these in orderly manner. Delivery of goods demands the same features with an add-on: you have to do this in timely fashion without any delay

6. Restrictions: Ascertain the type of restrictions, if any, that prevail in the location. Restrictions work in different ways. Begin your survey with zoning rules that restrict certain business activities and then proceed to local area rules regarding transport, parking, hours of business etc. If you eye a location in a shopping mall or supermarket, you have to check with the management regarding rules of business conduct. Finally, you must ensure that safety and security rules covering the location could be adhered to by you easily

7. Amenities: While convenience relates to the ease of business process, amenities are important for human welfare. You must tick the type of amenities available and the quantum from either the local authority or the management of a shopping centre. Amenities include, provision of water, sewerage, waste disposal, fire exits, fire hosts and many others. Additionally, you must review availability of watering holes where visitors can have drink or coffee unless you are going to provide in-house services

8. Reputation: Measure the fame and note of a location carefully before you do anything. Does this location is a reputed one where people want to do business? Many people get attracted to a particular location or shopping centre due mainly to its reputation and goodwill. Moreover, you have to look for competitors in that location. If they are doing well there is no reason why you cannot. Some locations are famed for a particular trade. For example, Wall Street is famous for finance. Therefore, if a location is the one most appropriate for your type of business then grab it

9. Cost: Finance is the ultimate arbiter. Can you afford the cost of having your business in this location? Check what the price of the location is, if you are buying it outright. For rent or lease see the amount of down-payment, deposit and monthly rentals. You have to find out the cost of amenities and convenience including parking facilities. You are not just buying a location you are taking the entire suite of the eight items described above.

10. Cosmics: Why cosmics? You will ask me. Yes, you need cosmics indeed. So far we have been concerned with utility aspects; now it is the turn for aesthetics to play its role. Cosmics arise from you as well as from the location. Your cosmics are aspects residing within you shaping and influencing you and your business though these are un-seen and un-noticed by you. Location cosmics relate to aesthetics residing in a particular location. I recently visited Kuala Lumpur, Malaysia to select a location for a business. After looking at few places I recommended one mall that had brilliant cosmic energy pervading and striking anyone who enters in.

Muthu Ashraff

Cosmic Adviser

Mobile : +94 777 265677

E-mail : cosmicgems@gmail.com

Web : http://www.cosmicgemslanka.com

Blog : http://cosmicgemslanka.com/blog/