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How to Foster Innovation

Innovation

Innovation

Innovation is a very important aspect of running a business. It takes innovative thinking for an entrepreneur to get started and get the business off the ground to begin with; and it takes innovation to keep a business fresh and in a state of growth. Since so much business is conducted via the internet, small businesses are no longer just competing with local companies in their region but with global businesses. One of the keys to being able to keep a business alive is having an emphasis on innovation instead of getting in a rut of just doing things the old fashioned way.

According to the dictionary, innovation is defined as introducing something new, whether it is a method, an idea or a device. To maintain an innovative atmosphere it is important to create a work environment that fosters, stimulates and rewards creativity.

Business Model to Include Innovation

When developing your business model it must be a top priority to include innovation and creativity as core values. Employees need to know from the start that the company has an emphasis on innovation and that creativity is rewarded and not shunned. When you are drawing up the core values of the company do not be vague about innovative ideas. There is not enough to substantiate the thought in a simple statement like, “our company strives to innovate.” It leaves the employee scratching their head and wondering what needs to be innovated products or processes. Be very specific with statements.

Let Everyone Participate

Engineers can be great innovators; however do not limit innovations to just one type of worker. You never know when a great innovative idea for a product may come from an office worker or an accountant. Don’t discount their new ideas on how to process purchase orders or invoices. They may have some innovations that end up saving the company a substantial amount of money. An idea that leads to improvements may come from anywhere; it is important to encourage an environment which is open to innovation for everyone in the company.

Build a Creative Atmosphere

It is up to you to create a creative atmosphere. Use colors which stimulate creativity and make sure there is adequate lighting; natural light is best if it is possible. Use inspiring colors and hang artwork throughout the workplace. It is also a great idea to provide a variety of creative activities for employees. Providing the right environment can increase employee’s creativity and output. There are some companies which provide stimulating games such as foosball and pool to help keep employee’s creative juices flowing.

Designate Time for Creativity

Stuffing someone in a cold white office for hours on end will stifle creativity. Get your workers out of the office now and then. Perhaps one Friday a month take a group outing. This may depend on the type of work that they need to do but trips to the library, gym or even a local coffee shop can spark creativity. One book company we are familiar with takes their design artists out to local bookstores/coffee shops once a month. They take time to discuss the various book covers, the creativity or lack of creativity in the designs. This fosters innovative thinking.

Reward Creativity and Innovation

Make sure to reinforce innovative ideas. They should feel comfortable sharing new ideas and it is important that they get credit for the ideas that are used. Rewards do not have to be outlandish, gift cards are an inexpensive reward. It is okay to reward with money and some even offer a bonus as well as a simple, but public recognition of their contribution.

Fostering Innovation

To foster innovation will mean that you create an environment where new ideas are welcomed and rewarded. It is not an expensive undertaking to design a work environment that stirs up employee’s creative juices and foster innovation that each person has.

How Does the Stock Market Work?

Efraim Landa and investment firms like Effi Enterprises are well acquainted with the workings of the stock market. They work with emerging businesses and help them gain value. One of the greatest steps for a company or a business is when they have become profitable enough to go public and make an Initial Public Offering (IPO) of their stocks. Typically a business idea begins with an entrepreneur who gets started and then outgrows their sources. This is when they look for a venture capitalist such as Efraim Landato help get them with funding options with the hope that there will be a day where they can make an IPO. This is when stocks in the company are available to the public through the stock market.

Stock Market

Stock Market

The stock market can be very confusing and those who are unsure about how it works can stand to lose a lot of money when they first start out. However, it is not as complex as it appears to be. Basically, you have the option of purchasing stocks in a company. Companies make these shares available as a way of funding their business. When someone purchases a company’s stock they do not own part of the company but are providing funds by which the company can grow. The more the company is worth, the more value their stocks become. Stocks are frequently traded back and forth on the “stock market.” There can be a few things that affect the price of stocks.

In one way it is as simple as the law of supply and demand. Stocks are available in a limited number and when there are a lot of people who want to buy stocks in a particular company the price will increase on their stocks. But when there is a decline in the number of buyers who want them, or there are a large number of people who want to sell the ones they have then the price on the stocks decreases. Theoretically the demand for stocks for a particular company will depend on how profitable the company is. However, what the company is expected to do in the future will also factor in to the value of the company’s stocks.

When a company goes public with their stock it is generally a way of increasing revenue. This is generally to be used for some form of expansion. Perhaps the business needs to add a new product or offer more services to their clientele. An IPO can be a way of raising those funds. The public can then invest in the company by purchasing the stocks.

The main goal of an investor is to make money on the stocks that are purchased. They will need to buy stock at a lower price and then when the price on the stocks goes up they will sell it off before it takes a downward turn. This will mean that stock holders will need to pay particular attention to the company’s value and the projected value of the company later on. Many times stock prices will go up before an earnings announcement but then decline if these earnings were much higher than what was generally expected.

A lot of novice investors think that when they purchase stocks they are going to receive from the company’s profits but this is not so. Some very large companies may pay a dividend and this is done a per share basis. But most companies hold on to their profits in order to pay for future growth. There are two schools of thought on this, some investors are interested in the company growing so that the stocks are worth more and others are more interested in investing in companies who are profitable enough to pay dividends. The type of stocks purchased will depend largely on a person’s investment goals.

Is Private Equity Investing Bad for The Economy?

Private Equity Investing

Private Equity Investing

Whether Private Equity investing has a positive effect or a negative effect on the economy is a big topic of debate right now. There are many who can point out all the positives that occur in the economic structure due to private equity; and there are others who can offer examples of ways the economy has been harmed because of this type of investing.

Positive Effects of Private Equity

If you are working at a very disorganized company which is looking at going belly up, having a private equity firm come in and save it may just save your job. For those whose jobs are saved it certainly looks like a good impact on at least the local economy. Many also suppose that companies which are run privately will perform better than those which are publically owned; largely due to the higher level of accountability which is required. When a Private Equity group or firm invests in a company they will sit on the board as a general rule to ensure that the company upholds a high ethical standard. Many officials cannot let some things slide by when your investors are sitting on the board watching every move.

When a private equity firm invests in a company it is usually one in which they already have a high level of expertise and experience in handling. They are more likely to be able to bring in consultants which can enhance the business and help it be more productive or efficient. They have a vested interest and want a good return for themselves as well as their shareholders. These are also long-term investment teams such as those at Effi Enterprises. They are in it for the long haul and are determined to gain long term profitability. The type of patience required can help them stay with a company for 4 or 5 years or longer until there are higher returns in sight. Private Equity can be very good for every size investor.

Negative Effects

When greed gets involved, Private Equity can get ugly. Many times a private equity firm can be bad for a company especially if they try to urge the company to incur much debt. This can be disastrous for an already struggling company. Handling funds this way can be very risky especially for smaller companies.

Another negative effect a private equity firm can have is if they lay of lots of workers trying to make the company more efficient. This does not happen a lot – but it does happen and it yields a negative effect on the economy. And if there are negative effects you will likely never hear about it unless there is something that goes terribly wrong. Private companies do not have to share financial reports; public companies do and must remain very transparent.

Private Equity is said to have created a group of super wealthy people. And the troubling part to many is that they do not pay taxes on this income like most of us do. This is because when money is made through investing you get a much lower tax rate called long term capital gains. A lot of times managers are paid by being allotted a certain percentage from set profits. Since their income comes from a type of interest it is considered investment monies; and therefore taxed at the lower rates.

What do you think?

Is private equity hard on the economy? It seems it works with a small or struggling business to help them become more established and this can be a great boost to the economy and save many jobs. Whether or not it is bad for a particular company may be determined by the firm’s perspective and procedures for improving the company they are investing in. But saving a company and keeping it afloat in a troubled economy is certainly a good thing for all persons involved.

Lunch with Warren Buffett

Warren Buffett

Warren Buffett

Warren Buffett is a household name because of his great wealth. But many of us forget that he amassed this wealth through different forms of private investing and hedge funds. He learned valuable lessons at a young age through investing in the stock market. As he matured he ventured out into various practices in private investing. For many, it seems that having lunch with this very wealthy man would be out of the question. However, each year Warren Buffett sponsors a luncheon that is a fund raiser for his favorite charity.

The GLIDE Foundation

Normally, eating lunch at a higher end steakhouse in Manhattan with nine people would run somewhere around $1000. But this year it cost on investor nearly $3.5 million. That was the final bid on this year’s charity auction in which the winner gets to enjoy lunch with Warren Buffett and the proceeds go to a charity based in San Francisco, the GLIDE Foundation. The charity provides meals, housing and funding for community based clinics. Over the last 13 years the auctions have raised more than $11 million for the group.

The charity auction is conducted online and the winner gets to take seven friends for lunch with Warren Buffett at the Smith & Wollensky steakhouse located in Manhattan. In 2011 a fund manager, Ted Weschler paid $2.63 million to share lunch with Warren Buffett. But after the lunch Weschler was hired by Buffett’s Berskshire Hathaway as an investment manager. He only beat out one other person in last year’s auction in which only 8 bids were offered by just 2 people. Weschler won both the 2010 and 2011 auctions which yielded almost $5.3 million for the charity.

In 2012, there were 10 bidders in all and over 106 bids were made during the 5 days the online auction was open. When it ended, the winner had bid $3,456,789 exactly. This amount will be given to Buffett’s favorite charity and the winner will enjoy lunch with Buffett. Smith & Wollensky also contribute a minimum of $10,000 to the charity to host the lunch.

The goal is not for Warren Buffett to find future employees through the luncheon; it is simply to raise money for his favored charity. While Buffett isn’t looking for new hires through the auction, Weschler did end up getting hired by Buffett last year to help in managing Berkshire’s investment portfolio. Most of the time, the winner of the auction just gets the opportunity to sit and converse with Warren Buffett, known throughout the world as a profitable investor and a leader in entrepreneurship.

Discussions with Warren Buffett

But talk over lunch is not always only about money with this multi-millionaire. Although the big draw for many bidders is Buffett’s amazing business sense and outstanding success in investing, the lunchtime conversation does not center around potential investments. Since Warren Buffett has made such a mark on philanthropy, many past winners have wanted to discuss giving. Since 2006, Buffett has continued to slowly give a portion of his fortune. He wants to eventually divide his Berkshire stock up between five charitable foundations. He intends for the largest portion to go to the Bill & Melinda Gates Foundation.

Warren Buffett and Bill Gates have been trying to encourage extremely wealthy people to give away at least half of the fortunes they have amassed. Almost 80 of the United State’s wealthiest have joined in with this effort.

Auction winners have expressed that the time spent having lunch with the well respected Warren Buffett is well worth the price they have paid. The lunch usually spans several hours and Buffett answers questions as they are posed. Usually, according to Buffett, many of the questions are about non-business topics like family and philanthropy.