It may seem like a simple job but purchasing car insurance has its challenges. If you’re a first-time buyer or want to change your plans, you need to know to make the right decisions. When purchasing any kind of insurance, there are some papers you have to sign and some agreements you have to make. Not to mention a full market of scammers ready to put you down with unlawful documents or unjust costs.
Getting car insurance may be necessary by the law, but it is not a child’s play. You have to be attentive and get the best car insurance in Ontario. For this reason, the below mentioned are some common mistakes people usually make when purchasing car insurance to help you make the best choice for yourself:
Settling on the First
The first rule of shopping is to never settle on the first deal you see. It is essential to always window shop as different insurance providers can offer different rates for added benefits. When it comes to car insurance providers, you can see a variation in pricing and quality. You add some benefits as well as drop some to get a favorable price to your budget. For this reason, it’s always helpful to have a few options to compare and get an offer that can satisfy your needs. Or you can go to an auto insurance providers’ comparison site to compare them in one place.
Not Asking the Right Questions
Things like overall cost, monthly fees, coverages, insurance span, and several others are decided when purchasing the right insurance. Not asking these questions related to these things and just going with whatever the provider offers can put you with an insurance that is either overpriced or underwritten. Both these circumstances can be harmful to the insurance of your car in a situation it suffers from an accident.
Filling out the Forms Incorrectly
When signing up for a car insurance policy, it’s always wise to read the fine print carefully and fill out truthfully. This form can serve as legal evidence of a car accident with your involvement if not filled with the right information. Your license and insurance can also be evicted, and you could serve a penalty. However, many people fill out the forms wrong, not knowing the consequences, and often get in trouble. Even if you have a past record of an accident or speed driving, you must enter the information truthfully down to the basics and drive securely knowing you have coverage.
Not Bundling Polices
If you didn’t know, there are probably several ways of getting discounts on your car insurance policy, and one of them can be bundling different policies. This means that you can ask the car insurance company to take care of all your insurance joined to property or health and give you a bundled sum.
This cost will be several times lesser than your various policies with different vendors. For this, you can either choose the new frim supplying car insurance to handle all other or use your previous vendor to provide car insurance.
Other ways can be asking the provider for a discount or getting multiple car insurance of different family members that drive with one for cuts.
Getting Too Much Vehicle
There can be a thing called buying too much car when it comes to car insurance. Not calculating the sots of insurance on the vehicle before buying it can make you pay a lot more in insurance than others. For this reason, you must always get a quote from different companies in the car you’d like to buy. Different car types like sports, classic, average, high performance/maintenance, or electric vehicles will amount to varying amounts in insurance. Choosing a more sustainable car can put you in for a discount, unlike a high maintenance car that takes a lot of fuel and needs several repairs after an accident.
Entrepreneurs are an important part of our economy — they offer new twists on old products and innovative services often making our everyday lives more convenient. As a potential new business owner getting your brand off the ground takes time and dedication, not to mention the financial hurdles you have to keep an eye out for.
We’re breaking down the essential tips any new business owner needs to know to successfully build their brand.
Create a Budget Blueprint
New business owners often underestimate the costs necessary to build a successful business. Strategically budgeting and sticking to your plans is necessary in order to avoid becoming financially drained. Having a financial blueprint before you even begin is your best bet. There are a number of templates available for small business owners, equipped with the links and tools you’ll need to keep your business-related finances on track.
Look at Lending Options
Striking out on your own comes with its own set of financial challenges — if you find yourself with irregular cash flow, there are ways to unburden yourself. Rather than the traditional lending options, consider looking at a payday loan as an alternative.
Companies like this grant you access to short-term assistance and need only supply basic information such as employment history and banking information. The right lender will help sidestep any hurdles to help you find temporary financial relief, and many companies will help you understand your borrowing options, so that you don’t fall behind in payments. Remember to only use loans like this for short term emergencies and not long-term financial planning.
Grow Your Capital
Steady cash flow is essential to keeping your business afloat. If you have a healthy amount of capital you can invest in long-term growth tactics like hiring more staff or expanding your office space. Lack of capital is a common hurdle for small business owners, but there are ways to overcome hurdles and build capital. If you don’t have enough savings to fund the entire operation yourself, consider applying for a business credit card — you can likely acquire a zero or low interest card which will allow you to borrow money when needed without hindering your credit.
Expect the Unexpected
With any new business there are bound to be unforeseen expenses — this could range from damaged equipment to inventory shortages, additional permits or licenses, or perhaps even needing to hire a small temporary staff. Building an emergency response fund into your quarterly budget is recommended to keep the financial stress at bay and allow you to focus your attention on building your clientele.
The general rule is setting aside three to six months of expenses, so you’re prepared should you need to use these funds to cover an unexpected cost. You’ll want to assess your potential risks and decide how much to set aside that feels realistic.
You might decide to increase your prices in order to set aside extra funds, or trim your office expenses to the bare necessities. The more you adapt your business, the more prepared you’ll be for any financial hurdle that comes your way. Follow these tips and your business will continue to grow and thrive.
The article discusses recent global economic changes and will largely focus on two of the worlds’ largest economies, namely China and the United States. The present superpower i.e. the United States has failed to come up with a solution to the challenges posed by the last four decades of rapid expansion of the Chinese economy. The Chinese population is 1.45 billion, more than four times larger than the US population, and any changes in its economy and the living conditions of its people are bound to have a global impact.
China is an ancient civilization. The Chinese selection process of the party leadership and government administration is based on a meritocracy, which is based on their very long experience and heavily influenced by their Confucian philosophy. The Qing Empire accounted for a third of the world’s wealth in 1810. For more than two thousand years China dominated the world economy; however, it is only for the last two hundred years the West has dominated the world economy, especially after the first Opium war in 1942, which was led by Britain against China. (Siddiqui, 2009) Understanding history is very important regarding why some countries are poor and some are rich. Respect for sovereignty is crucial for a country’s economic development. In order to achieve socio-economic development and cooperation among countries is very important. To achieve global economic prosperity and to improve the environment, cooperation among countries is crucial, which means multilateral cooperation. But how can multilateralism be strengthened?
In Donald Trump’s trade war with China, it appears that the US has made a mistake by opposing China on all major fronts. For instance, the US opposes China’s ‘One Belt and One Road’, including the China and Pakistan Economic Corridor CPEC project, which it sees as a threat to its interests in South Asia and in the rest of the world. (Siddiqui, 2019a) It seems that the US has no economic strategy to deal and engage with China.
We will discuss here the historic conflict between nations in ancient Greece and try to examine them in light of the present context between the US and China. Tensions have grown enormously in the last few years in the South China Sea, where the US (along with Australia and other neighbouring countries) is trying to create a war-like situation. The US is trying to humiliate China, however, rather than initiating a military show down and encircling China, it should compete in technological development.
Let us look more broadly, for instance, when a rising power (China) threatens to displace an existing power (the US), how can things potentially develop in terms of their relationship? For example, when Germany’s economy grew faster than Britain’s in the 1900s, it rapidly rose as an economic power in first decade of the 20th century. Germany’s potential of emerging as an economic superpower created fear in Britain and France, which led to World War I in 1914 and again World War II in 1939. Thucydides’ Trap explains why conflict can happen and how it can be defused. According to Thucydides in ancient Greece, why countries go to war is because of three factors: fear, honour and interest. Thucydides’ Trap refers to the theory that “when one great power threatens to displace another, war is almost always the result“. Thucydides was an ancient Greek historian who was born in Alimosin 460 B.C. and died in 411 B.C. He is known for his book The History of the Peloponnesian War which analyses in detail the key reasons behind the war between Sparta and Athens in the 5th Century B.C. He described that the primary cause of the Peloponnesian War was the “growth in power of Athens, and the alarm which this inspired in Sparta”. Thucydides traces the development of Athenian power through the growth of the Athenian empire in the years 479 B.C. to 432 B.C. This is known as Thucydides’ Trap. The question is how to avoid such possibilities for war between two global economic powers.
Source: IMF, World Economic Outlook, October 2018.
During the post-war period, the GDP’s of West Germany and Japan grew faster than the US, and similar trends were observed in labour productivity as well. Both these countries’ economies expanded and began to challenge the US in many consumer and manufacturing goods. Since the 1980s the Chinese economy has grown even faster than ever experienced in the past and its contribution to global output has risen dramatically. (Siddiqui, 2020a) For instance, we can measure in terms of the Purchasing Power Parity (PPP), which is one popular macroeconomic analysis metric to compare economic productivity and standards of living between countries. The PPP compares different countries’ currencies through a “basket of goods“. In 2004, the Chinese GDP was a quarter of the US’s, its economy rose to become equal to the US in 2014. In PPP terms and it is expected that the China’s GDP will be 40% larger that the US by 2024. Figure 1 shows China and US GDP growth rates measured in PPP from 1980 to 2020. (IMF, 2018)
During the post-war period, the GDP’s of West Germany and Japan grew faster than the U.S.
Additionally, the Chinese economy contributed just 2.8% of the global GDP in 1980, but rose to 18% by 2018, which was one of the most phenomenal increases ever witnessed in history. China’s share in global GDP as percentage of world GDP has risen sharply since 1980s as indicated in Figure 2.
Source: The World Bank, 2019.
II. Changes in the Living Conditions
Since 1989, the living conditions of half of the US population have declined and the average real incomes of the bottom 50% of the US population have deteriorated in real income terms. By contrast, during the same period, the majority of China’s population has seen sharp improvements in their real incomes and living conditions. They have greater access now to education, health, and housing than at any time in their past history. Under such circumstances, the US is asking Chinese people to stand up against their government in support of political pluralism and democracy; it seems that the US ruling elites are very naïve. Of course, Chinese people are aware of the examples of failures of democracy and contraction of the economies in post-1990s Russia and Latin America.
Why was it that even the Chinese Communist Party’s bureaucratic apparatus was much quicker to change? It seems that once the party decided, it ordered its mass of organisations and party members to fully devote themselves to achieving its goals. Thus, the party was not simply a spectator, but rather was seen as a part of the system to achieve the government’s stated objectives (Siddiqui, 2015a; also see 2015b).
Since the adoption of the pro-market policy in 1978, China has gradually opened its economy to trade and foreign investment. China has also sustained the world’s fastest growing economies, with a real annual GDP growth of average 10% up to 2018, a growth described by the World Bank as “the fastest sustained expansion by a major economy in history”. Obviously, this growth of the Chinese economy has enabled the country to double its GDP every eight years and helped to raise about 800 million people out of poverty. As a result of consistently fast GDP growth over four decades, the country has become the world’s largest economy on the basis of purchasing power parity: a top manufacturer, trader and holder of foreign exchange reserves. Moreover, China is now a major commercial partner of the US, besides being the US’s largest trading partner; it is also the largest foreign holder of the US Treasury Securities, which funds US Federal debts and keeps interest rates low in the US.
China is launching a new growth model that relies less on exports and Western markets, and more on domestic consumption and markets in developing countries.
Despite the fact that the Chinese economy has slowed from GDP growth rates of 14.2% in 2007 to 6.5% in 2019, and during theCovid-19 set back of the 2020, the IMF predicts that it will continue to grow to 5.5% by 2024. China is launching a new growth model that relies less on exports and Western markets, and more on domestic consumption and markets in developing countries. The government has recently increased huge investments in R&D and efforts are being made to make innovation a top priority in economic planning through various government initiatives such as “Made in China 2025”, where it intends to modernise the manufacturing sector and become a major global player in this sector and high tech.
Since Deng Xiaoping launched economic reforms in China in 1978, the people have seen rising incomes, an expansion of employment and improvement in their living conditions. The Chinese key goal seems to be to bring back past glory. Moreover, the Chinese are aware of their national humiliation following two armed conflicts in the mid-19th century. The first Opium War (1839-42) between Britain and Chinese armed forces, and the second Opium War (1856-60) when Britain and France jointly attacked China, and finally in 1860, the plundering and burning of the Chinese Imperial Summer Palace. The Chinese defeat marked the signing of unequal treaties that facilitated the weakening of the Chinese sovereignty and the collapse of the Qing Empire.
Source: https://thenextrecession.wordpress.com./
In 1980, China invited foreign capital, but kept them under controlled capital outflows. As a result, the Chinese economy grew rapidly, along with a rise in employment, productivity and investment, and trade ratio to GDP. Figure 3 indicates investment to GDP in percentage from 1980 to 2018 for advanced economies and Chinese economies. China has more than doubled its total investment to GDP in its economy compare to advanced economies. It also successfully diversified its economy by moving the people from agriculture to expanding the manufacturing sector. China witnessed enormous growth in the last four decades and the country has successfully moved towards industrialisation and urbanisation and at present most of its export consists of manufactured goods. (Siddiqui, 2015c and also see 2015d)
In contrast to rapid China’s economic expansion during the post-reform period, Russia launched pro-market economic reforms, including capital liberalisation, deregulation and privatisation of state enterprises a decade later. But unlike China, Russia did not follow capital control, which resulted in a lot of capital outflows from the country, also known as capital flight, and boosted corruption and money laundering. As a result of the adoption of neoliberal economic reforms also known as ‘shock therapy’ in Russia in the early 1990s, the GDP shrank by 25%, living conditions and life expectancy also reduced sharply. The country suffered de-industrialisation and began to rely on exports of natural resources such as oil and gas.
III. China’s GDP Growth Since 1980s
Prior to the initiation of economic reforms and trade liberalization nearly 40 years ago, China maintained policies that kept the economy very poor, stagnant, centrally controlled, vastly inefficient, and relatively isolated from the global economy. Since opening up to foreign trade and investment and implementing free-market reforms in 1978, China has been among the world’s fastest-growing economies (Siddiqui, 2015a).
With the maturing of the Chinese economy, GDP growth has slowed significantly, from 14.2% in 2007 to 6.6% in 2018, and that growth is projected by the International Monetary Fund (IMF) to fall to 5.5% by 2024.
The Chinese government has slowed down its growth, which is seen as normal during this phase of its economic development. This recent growth model of China relies on scaling down fixed investment and exports, whilst placing more emphasis on boosting domestic consumption and innovation as new factors to promote economic growth. It can be surmised that such policy reforms are required in order to avoid hitting the “middle-income trap” when countries achieve a certain economic level however, afterwards begin to see a decline in their GDP growth rates because of the failure to adopt new sources of economic growth via innovation.
However, currently the Chinese government has made innovation a top priority in its economic planning through a number of policy initiatives, such as “Made in China 2025,” a plan announced in 2015 to upgrade and modernize China’s manufacturing in 10 key sectors through extensive government assistance in order to make China a major global player in these sectors. However, such measures have raised concerns in the US that China intends to use industrial policies to decrease the country’s reliance on foreign technology and to dominate global markets. (Siddiqui, 2020b)
IV. Growing Concerns in the US
In 2017, the Trump Administration launched a Section 301 investigation of China’s innovation and intellectual property policies and found that China’s rapid growth of economy was harmful to U.S. economic interests. It subsequently raised tariffs by 25% on US$250 billion worth of imports from China, while China increased tariffs, ranging from 5% to 25% on US$110 billion worth of US imports. Such measures have adversely affected and reduced bilateral trade since 2019. By mid-2019, Donald Trump announced a further rise in tariffs on many more products from China. Obviously, the escalating trade conflict between the US and China could have adverse consequences for the Chinese economy.
China is currently the United States’ largest merchandise trading partner, its third-largest export market, and its largest source of imports.
Moreover, the high rate of growth in China for the last four decades has resulted in a substantial increase in bilateral commercial ties with the US. According to the US trade statistics, total trade between the two countries grew from US$5 billion in 1980 to US$670 billion in 2019. China is currently the United States’ largest merchandise trading partner, its third-largest export market, and its largest source of imports. Many U.S. companies have extensive operations in China in order to sell their products in Chinese and overseas markets by taking advantage of low wages. Their operations in China have helped many US corporations to take advantage of low wages, remain internationally competitive and earn higher profits. Figure 4 shows a sharp rise in China’s trade and the important element was that exports were larger than imports.
Source: World Trade Organisation (WTO) and China’s Customs Department.
China has emerged as a major global economic power. For example, it ranks first in terms of economic size on the basis of PPP in value-added manufacturing, merchandise trade, and holding foreign exchange reserves. It is also important to highlight that value added manufacturing proportion has risen faster than other major manufacturers such as US and Japan (see Figure 5) (Siddiqui, 2015c). Figure 6 shows that China has maintained positive current account balance while US is in negative. China’s growing global economic influence and trade surplus will have significant implications for the US. While China is a large and growing market for U.S. multinational companies, the growth of Chinese businesses is seen by the US as against its economic interests.
Source: The World Bank, 2019
Source: IMF (2019)World Economic Outlook database. https://www.imf.org/en/News/Articles/2019/08/09 na080919-chinas-economic-outlook-in-six-charts
China has emerged as a major global economic power. For example, it ranks first in terms of economic size on the basis of PPP in value-added manufacturing, merchandise trade, and holding foreign exchange reserves. It is also important to highlight that value added manufacturing proportion has risen faster than other major manufacturers such as US and Japan (see Figure 5) (Siddiqui, 2015c). Figure 6 shows that China has maintained positive current account balance while US is in negative. China’s growing global economic influence and trade surplus will have significant implications for the US. While China is a large and growing market for U.S. multinational companies, the growth of Chinese businesses is seen by the US as against its economic interests.
However, the emergence of China as a major economic power has raised concerns among many US policymakers. (Siddiqui, 2018a) Some claim that China uses unfair trade practices, such as flooding US markets with cheap consumer goods by under valuing its currency and subsidising local producers. Such practices threaten jobs and incomes in the US. While others argue that China’s growing use of industrial policies to promote and protect certain domestic industries, and its refusal to take action against widespread infringement and theft of US intellectual property rights (IPR) in China, thus undermines free competition. (Siddiqui, 2018b) Moreover, while China has become a large and growing market for US exports, its trade and investment policy limits opportunities for US companies to sell in the Chinese market.
The Chinese government views a growing economy as vital to maintaining social stability. However, China faces a number of major economic challenges that could dampen future growth, including distortive economic policies that have resulted in overreliance on fixed investment and exports, rather than increasing domestic consumption, subsidies for state-owned firms, a weak banking system, widening income gaps, growing environmental problems and so on. The government has stressed that it will address these issues and increase the role of the market in the economy, boost innovation, encourage consumer spending and combat corruption.
In recent years China has become increasingly involved in outwards investments and building greater economic ties to establish a contract to access the supply of raw materials for its growing industries, especially in Africa and Latin America. It has also launched giant projects, especially in infrastructure development. China’s ‘One Belt and One Road’ initiative represents a grand strategy by China to finance infrastructure throughout Asia, Europe, Africa, and Latin America. If successful, China’s economic initiatives could significantly expand export and investment markets for China and increase its influence globally.
China has emerged as the world’s largest manufacturer according to the World Bank. The statistics show the gross value added of manufacturing in China, the US, and Japan expressed in US$ in 2006 and 2016. Gross value added data reflect the actual value of manufacturing that occurred in the country (i.e., they subtract the value of intermediate inputs and raw materials used in production). In 2016, the value of China’s manufacturing on a gross value added basis was 49.2% higher than the US level. In recent years, the manufacturing sector has played a considerably more important role in the Chinese economy than it does for the US. In 2016, China’s gross valued added manufacturing was equal to 28.7% of its GDP, compared to 11.6% for the US.
During 1980 for example, on crucial developmental indicators such as literacy rate, China had 65%, whereas the Indian literacy was still only 44% for the same period. China promoted industrialisation and the export of low-priced manufactured products during the Cold War. Then in the mid-1970s, the US was very keen to use the ‘Chinese Card’ against the Soviet Union. Additionally, to combat rising demands for wages in the West, and to raise profits of the over-accumulated petrodollar deposited in the Western Banks found globalisation and foreign investment a very attractive policy. Moreover, throughout the East Asian countries, foreign direct investment and export-led growth became the “success model of growth”, soon afterwards, China also these adopted these policies and negotiated good terms with foreign companies during the height of the Cold War.
China adopted a pro-market policy, but still the state was always to provide a helping hand, wherever it was desired. A similar economic policy approach was followed in the 1950s in Japan and later on in the 1960s by South Korea. Moreover, carrying out land reforms in both countries ended land monopolies and broke the power of rural elites. Alongside this, mass availability of free primary education and basic healthcare promoted welfare and reduced gender inequality. The very early land reforms carried out in South Korea and Taiwan, and earlier in Japan, and of course in China in a very different way, boosted agriculture production, increased rural household incomes, land productivity and reduced rural inequality dramatically. The rapid industrialisation achieved in East Asia, and also more recently in China, successfully diversified the economy and thus lessened the burden on the agricultural sector.
China adopted a pro-market policy, but still the state was always to provide a helping hand, wherever it was desired.
It seems that Deng Xiaoping was confident enough to believe that China would not be overwhelmed or undermined by the West. Some researchers also stress that Deng Xiaoping believed in ‘free market’ capitalism. I think he was a pragmatist and nationalist, who was willing to try different techniques to achieve economic development in China. His main concern was to improve the performance of the Chinese economy and the living conditions of its people. Deng had a background as Communist Party leader, and experience in the military. His economic thinking was never explicitly expressed in a coherent way. In 1978 he set out an agenda for the country, which included prioritising domestic stability and modernising the economy through economic reforms. He initiated economic reforms which included inviting foreign capital and technology in a few regions of China to modernise the economy and businesses, and increase productivity and exports. Deng called it “Socialism with Chinese Characteristics”.
V. Conclusion
The phenomenal economic transformation of the Chinese economy which has unfolded over the last forty years or so was unseen before in human history. Understanding this turn in global economic history is particularly important since the country suffered two centuries of Western domination since the 1820s. The incredible downfall of China in the second-half of the 19th century until the mid-20th century is attributed essentially to the ravages of colonialism and imperialism that characterised that whole period. China suffered deindustrialisation and repeated famines particularly because of the colonial trade policies imposed by Britain and followed by long periods of war.
China’s rapid transformation from a poor developing country to a major economic power within four decades has been spectacular. From 1978, when China introduced pro-market economic reforms, until the end of 2018, its real GDP grew at an average annual rate of nearly 10%. China is no longer simply a regional economic power, but in recent years has emerged as a global economic power, especially after the 2008 global financial crisis, when China decided to increase investment at domestic front, and more recently, set itself up as a champion and supporter of globalisation against the protectionist policies of the US.
China also has launched and financed ‘One Belt and One Road’, which is a massive global investment project in infrastructure to boost trade and economic growth. (Siddiqui, 2019a) Recent Chinese overseas investment in infrastructure is a long-term investment, unlike the US whose investment is in the financial sector, both short-term and speculative. (Siddiqui, 2019c) Since the 1980s, in the US and the UK the role of industrial capital has shrunk, while the role of financial capital has increased. (Siddiqui, 2019b; also see 2020c) Recently, China has confronted Covid-19 and brought under control in a short period, whilst the US and UK are still struggling to bring under control. (Siddiqui, 2020d) In the middle of the pandemic racial tension and violence broke out in many major US cities against the police brutalities.
Finally, China has no history of attacking other countries and interfering in their internal matters. While the US since the 1950s had just done opposite, interfering in many of the developing countries and often being involved in invading Latin American and Middle Eastern countries in the recent past. I hope that growing tension between US and China will not escalate further and become like Thucydides’ Trap. We must learn from history, because unlike ancient Greece, both economic giants are nuclear powers and any war could endanger our whole planet.
Dr. Kalim Siddiqui is an economist, specialising in International Political Economy, Development Economics, International Trade, and International Economics. His work, which combines elements of international political economy and development economics, economic policy, economic history and international trade, often challenges prevailing orthodoxy about which policies promote overall development in less developed countries. Kalim teaches international economics at the Department of Accounting, Finance and Economics, University of Huddersfield, U.K.. He has taught economics since 1989 at various universities in Norway and U.K.
Siddiqui, K., (2020a). “A Comparative Political Economy of China and India: A Critical Review”, chapter 3, pp. 31-58, in Young-Chan Kim (Edi.) China-India Relations: Geo-Political Competition, Economic Cooperation, Cultural Exchange and Business Ties, Cham, Switzerland:Springer Nature Switzerland AG. ISBN: 103030444244. ISBN: 139783030444242.
Siddiqui, K., (2020b). “The US Dollar and the World Economy: A critical review”, Athens Journal of Economics and Business. 6(1): 21-44. https:doi:10.30958/ajbe/v6i1.
Siddiqui, K., (2020c). “A Perspective on Productivity Growth and Challenges for the UK Economy”, Journal of Economic Policy Researches, 7(1): 1-22.
Siddiqui, K. (2020d). The Impact of Covid-19 on the Global Economy, World Financial Review, May-June, pp.25-31.
Siddiqui, K., (2019a). “One Belt and One Road, China’s Massive Infrastructure Project to Boost Trade and Economy: An Overview”, 9(2): 214-235. International Critical Thought. Taylor & Francis Group, Routledge. https://doi.org/10.1080/21598282.2019.1613921
Siddiqui, K., (2019b). “The US Economy, Global Imbalances under Capitalism: A Critical Review”, Istanbul Journal of Economics, 69(2): 175-205, December. ISSN 2602-4151.
Siddiqui, K., (2019c). Financialisation, Neoliberalism and Economic Crises in the Advanced Economies World Financial Review, May-June, pp.22-30.
Siddiqui, K., (2018a). “U.S. – China Trade War: The Reasons Behind and its Impact on the Global Economy”, The World Financial Review, November/December, pp.62-68. ISSN 1756-3763.http://www.worldfinancialreview.com/?p=36411.
Siddiqui, K., (2018b). “Capitalism, Globalisation and Inequality”, World Financial Review, November/December, pp. 72-77. ISSN 1756-3763. http://www.worldfinancialreview.com/?p=36382
Siddiqui, K. and P. Armstrong, (2017a). “Capital Control Reconsidered: Financialization and Economic Policy”, International Review of Applied Economics 32(6): 1-19, March. DOI.org/10.1080/02692171.2017.1375464.
Siddiqui, K., (2017b). “Austerity as a Tool of Fiscal Consolidation: Theoretical and Empirical Perspective”, in edited by S. Owsiak, Public Finance and the New Economic Governance in the European Union, pp.116-166, Warsaw: Wydawnictwo Naukowe WN SA. ISBN 978-83-01-19812-1.
Siddiqui, K., (2015a). “Perils and Challenges of Chinese Economic Development”, International Journal of Social and Economic Research, 5 (1): 1-56. ISSN: 2249-6270. DOI: 10.5958/2249-6270.2015.00001.X.
Siddiqui, K., (2015b). “Foreign Capital Investment into Developing Countries: Some Economic Policy Issues”, Research in World Economy, 6(2):14-29. DOI: 10.5430/rwe.v6n2p14.
Siddiqui, K., (2015c). “Political Economy of Japan’s Decades Long Economic Stagnation”, Equilibrium Quarterly Journal of Economics and Economic Policy 10(4):9-39. DOI: http://dx.DOI.org/10.12775/ EQUIL.2015.033.
Siddiqui, K., (2015d). “Challenges for Industrialisation in India: State versus Market Policies”, Research in World Economy 6(2):85-98. ISSN 1923-3981. https://DOI.org/10.5430/rwe.v6n2p85.
Siddiqui, K., (2009). “The Political Economy of Growth in China and India”, Journal of Asian Public Policy 1(2):17-35, March. Routledge, Taylor & Francis. ISSN 1751-6234. DOI: 10.1080/17516230902734528.
Starting and running a business is difficult, and one of the biggest obstacles is financing. Every business requires money to run its operations, and lack of adequate funding is often credited as one of the main reasons businesses fail.
To prevent your business from facing the same problem, it’s essential to know the different financing options. With such a wide range available, you’re bound to find something that suits your business’s needs.
So, if you’re looking to secure financing for your business, here are the different options you can choose from.
Equipment Financing
Equipment financing refers to using a lease or a loan to borrow or purchase equipment for your business. Equipment, in this case, could refer to restaurant equipment or a delivery van. It differs from other forms of finance because it involves physical assets that serve as collateral. Due to this, equipment financing typically involves lower risk and is more cost-effective than different financing types.
Equipment financing is an excellent source of finance for businesses that want to grow but can’t afford to invest in expensive equipment. Since the payment is spread out over a period, it’s an affordable option for a business. Additionally, if your industry is rapidly changing due to technology and machinery gets obsolete quickly, it makes more sense to lease equipment than to buy it.
Business Credit Cards
One source of short-term business finance is the business credit card. This source of finance is, in fact, the most common source for small businesses as they can easily use to pay for all kinds of business expenses without incurring interest, as long as the outstanding balance is paid in full by the credit-free period. In fact, 31% of businesses that seek credit apply for credit cards, making them a popular option.
For startups, especially, a business credit card is handy since it improves their purchasing power. However, it’s important to note that while the credit is free in the short run, a credit card could be quite detrimental and result in huge amounts of debt and significant interest if you fail to keep track of your spending. On the other hand, if you use your business credit card wisely, you can create a positive credit rating, which is valuable for when you want to secure a loan.
Business Loans
Business loans can provide you with money that you have to pay back over a particular period with added interest. These could vary from medium to long-term, and there is a wide range of options available, varying from government-backed to commercial loans.
Unlike venture capital, with business loans, you don’t need to give any equity and you can opt for an affordable plan and payment rate. Many countries also offer tax benefits in exchange for paying a loan in full. When you’re opting for a loan, it’s vital to be mindful of the timeline and payment terms and determine whether you can pay it. You should ideally have a plan in place to pay it back before you finalize the agreement.
Grants
Grants for small businesses are usually awarded by a government body, the government, or a charitable organization. Grants are typically provided for companies that meet certain criteria and fulfill an application process.
While they are an excellent source of funding for businesses since you don’t need to pay them back, the application process is quite competitive and is often dedicated to businesses that are part of specific sectors. When deciding whether to apply for a grant, you need to determine how much time the application process will take and how likely it is for your business to be awarded.
Crowdfunding
Crowdfunding has become a popular source of finance for a wide range of businesses, with campaigns having an average success rate of 22.4%. It typically involves getting a small amount of finance from a large number of people, all contributing to a large sum. Depending on the type, crowdfunding can be loan-based where you crowdfund a loan, rewards-based where you offer perks or rewards in exchange for the finance, or equity-based, where you offer equity in exchange for the funds.
Crowdfunding is often suited to businesses that are product based and high-tech. It’s crucial to note that crowdfunding is heavily dependent on whether you can market your business idea. If you’re able to do that, though, it’s an excellent financing source that provides you with the funds required for the development and launch phases. You can explore crowdfunding platforms such as Kickstarter, Crowdcube, and Seedrs.
Venture Capital
For companies looking to grow, venture capital is a brilliant option to choose for equity exchange. In 2018, $254 billion was invested in 18,000 startups worldwide. To obtain VC, you need to demonstrate that your business is scalable and has evidence to prove it. When a VC is interested, you also need to be prepared for an audit and should be able to provide updated plans and books. Lastly, VCs are seriously invested in your growth, which may bring pressure with it, so you need to be ready for that.
Final Thoughts
Any business owner needs to know the pros and cons of the various financing options available to them. It’s important for you to research and determine the best way forward for your business to ensure you’re securing the best financing option for your business’s long-term growth. Have you ever secured financing for your business? Which option worked out for you? Let us know in the comments below.
Various market, administrative, and planning factors may cause small businesses to fail, but accounting mistakes are up there as one of the most notorious culprits behind business failure in the modern world. Planning your finances and keeping an up-to-date record of all cash outflows and inflows can help you make better decisions and show the real direction of your business’s progress. If there are invoices, receipts, and sales documents lying everywhere, it means you need to hire a CPA firm or accounting expert to assist with bookkeeping tasks or implement flexible payroll solutions. Read on for five tips to enhance your bookkeeping habits and streamline your growth.
1. Focus on record accuracy
Keeping accurate records is often easier said than done. Once you get into management, you realize just how hard it is to account for every coin that has moved in and out of its accounts. If there are invoices, receipts, and sales documents lying everywhere, it means you need to hire a CPA firm or accounting expert to assist with bookkeeping tasks.
2. Know your tax deadlines
If you run a small limited liability company, you may be required to pay VAT, corporate tax, and PAYE quarterly. Each of these tax forms has a varying deadline that can lead to harsh penalties if not met. The best thing about working with a professional accountant is that they save you the hassle of identifying and managing your company’s tax obligations, including PAYE. All you need to do is find a reputable company to transfer the workload to and focus on increasing sales.
3. Use cloud-based accounting services
In this digital era, failing to use accounting software – whether you are doing it yourself or with the help of a CPA firm – can be detrimental to your bottom line and give competitors the edge on you.
The market offers some of the most sophisticated yet easy-to-use software and can help unify your company’s financial activities for easier assessment and interpretation. It may take a while to get the hang of such systems, but if chosen carefully, an accounting software program is bound to increase your accounting accuracy and save you tons of money in labor costs. Not to mention that you can check out this online w2 form for tax reporting to make the process easier as well.
4. Separate your business and personal finances
Keeping business and personal finances in the same account is one of the most common mistakes made by small business owners. When all your finances are in one wallet, you are likely to spend on big-ticket purchases thinking you have money to splurge. Unknowingly, you may end up exhausting your personal money and eating into your business finances.
5. Brace for major and unforeseeable expenses
Equipment replacement and upgrades will always be required for any business expansion plans. Sometimes, you need to do it for compliance or for compatibility with new software. You should brace for these large capital expenses and plan ahead to avoid business-disrupting surprises. And just so you know, the Section 179 IRS provision lets business owners deduct up to $1 million of new equipment and property in their purchase year, instead of the conventional year-over-year depreciation plan. This means that big purchases may be a pain now, but they will prove beneficial in the long run.
6. Understand labor costs before hiring
If you are going to need assistance with running your business, know that those employees will need more than just wages at the end of every month. You will also be required to pay their payroll taxes and benefits.
These costs come way faster than many business owners project. Avoid putting yourself in a position where you are compelled to reduce compensation post-hire because you were too generous during employee recruitment.
You might want to outsource administrative tasks or your marketing campaigns, such as your search engine optimization (SEO). For instance, you can outsource an SEO specialist to tackle this job or entrust it to an SEO company. The same is true with data entry jobs and cybersecurity monitoring. By doing so, you won’t need to pay in-house employees with full benefits.
However, taking this employment route also has a fair share of challenges. For example, you must still comply with employment laws. Hence, you must research how to outsource or remote employment works. Outsourcing also means entrusting and risking your business data to someone outside your organization.
7. Keep your records tidy
Clutter piling up on the desks and floor is inevitable when dealing with paperwork. However, while this is acceptable in your personal life, it can be a significant disadvantage in business and accounting. Being tidy makes it easy for you to find specific documents and papers, which saves you time and money. It can also serve as a selling point to customers who fancy promptness and efficiency.
Using online accounting software is advisable as this tool can help organize your records. Moreover, if you need professional help during the tax season, you can invite your business partner, bookkeeper, accountant, or financial advisor to your software to analyze data. Managing cash flow, sending invoices, and tracking expenses are much easier because your business accounting data are accessible in a secure place.
8. Ensure customers pay balances
The receivables column can lull you into believing you’re making headway due to the high amount of sales you are making, but that shouldn’t count unless you have received the money. While there is nothing wrong with letting customers take materials and services on credit, letting them go without paying can hurt your bottom line and slow down your journey to financial success.
Track unpaid receivables and update your records using online accounting software. That way, you can create and send reminders to yourself and your customers. To prevent unpaid receivables, suggest automatic payment scheduling at an agreed schedule or require a post-dated check.
Endnote
The corporate world is a harsh one for small business owners. The above accounting tips can help you curb finance-related mistakes that can cripple your infant venture. You can also check with an accounting expert if you need more professional advice.
If you were looking for a country to exemplify evolution, adaptation to a changing environment, you would do well to consider Colombia. Just one glance at the country’s history demonstrates that it is a country of change. Now, the government is determined to steer Colombia’s evolution in a direction that benefits all. The forthcoming Colombia Investment Summit 2020 is a significant element in engineering that evolution.
A visitor arriving by steamship in the port of Barranquilla in the early twentieth century would have found, on walking down the gangway, a country of barely four million mainly country-dwelling inhabitants who made their living from the land. Moving forward a century, the modern visitor, stooping out through the doorway of a jet airliner and into the warm, kerosene-scented air of the passenger boarding bridge, walks into a highly urbanised country of 50 million inhabitants, of which more than 70 percent live in the cities. Colombia now boasts one of the highest growth rates in Latin America. It is also one of the most ethnically and linguistically diverse countries in the world, a fact which may, by the way, help to explain the passion and drive of its people.
The economy of Colombia developed rapidly in the second half of the twentieth century, thanks largely to the country’s richness in natural resources. Now, the Colombian government is vigorously pursuing a policy of even more dynamic change, aiming to create, in the words of the president, Iván Duque, “an equitable country, based on legality and entrepreneurship”. The challenges are formidable but the elements are in place.
CIS 2020
The central plank of the government’s strategy is that of attracting foreign investment, and a major conduit in that has been the annual, and increasingly successful, Colombia Investment Summit. This year’s event, for reasons that are all too depressingly familiar to most of us all around the world, will be conducted virtually. Over the course of three days, from 7 to 9 October 2020, the summit will see contributions by people from a range of political and business organisations. They are key personalities from across the gamut of stakeholders in the drive to leverage foreign investment to the mutual benefit of the investors themselves and also to the Colombian nation, through the generation of sustainable, responsible development. It is, as the organisers aptly describe it, an “investment matchmaking” event and will be led by the Ministry of Trade, Commerce and Tourism, and by the state organisation ProColombia.
What is ProColombia?
ProColombia is the government body charged with coordinating, promoting and facilitating the drive to attract FDI to Colombia and was set up as a principal component in the country’s drive towards the “internationalisation” of Colombia. It’s an initiative that recognises that the future of the country is one of full participation in the international political, economic and commercial community, and that there are mutual benefits to be derived from foreign involvement in the development of Colombia. ProColombia’s president is Ms Flavia Santoro, who will be delivering a talk as part of CIS 2020.
Colombia has long been associated with exports in the field of mining and extraction. But now the government’s ambition is to take full advantage of the country’s equally deep reserves in other fields: those of talent, creativity, resilience, the energy of the people, its resources in the form of nature, its potential for tourism of new and creative kinds.
To that end, ProColombia is at the forefront of supporting potential investors in the decision-making process with the goal of producing profitable projects with sustainable benefits to the country.
Why Colombia?
So, why Colombia? With so many countries around the world vying for foreign investment, what is it about Colombia that should make potential investors sit up and take notice?
The country It would be fair to say that Colombia has had some very thorny issues to deal with in its internal affairs, particularly in the second half of the twentieth century. And perhaps the resulting unfavourable perception of the country in the past is one impediment in the bid to attract foreign investors today. But they should not worry. The Colombia of today can justly claim to offer political, institutional and economic stability that is unrivalled in Latin America. The country’s recent access to the OECD is just one testament to this.
In fact, Colombia is a fully signed-up member of the international community, both regionally and worldwide. To name but a few, it is a member of the Pacific Alliance (which promotes the free circulation of goods, capital, services and people in the member area), the WTO, the OAS, and the Association of Caribbean States, and an associate member of Mercosur (which has similar aims to the Pacific Alliance, for the Latin America region). Colombia is also the “C” in the CIVETS group of countries, emerging economies that are acknowledged as “ones to watch” in the future (the others are Indonesia, Vietnam, Egypt, Turkey and South Africa).
The geographical location of Colombia almost shouts out its huge benefit in making the country a strategic location for business. Situated at the gateway to the South American continent, it boasts major ports on both the Caribbean and Pacific coasts, giving access for shipping routes to both seaboards of the US. The government is currently investing in infrastructure to improve internal road links with the major ports – such projects also being major opportunities for foreign investment themselves.
And geography bestows yet one more benefit on Colombia: its time zone, which corresponds to US Eastern Standard Time (EST) (although there may be some variation because of daylight saving). Why is the time zone important? Now is a good time to talk about nearshoring.
Nearshoring In the past, a lot of businesses moved parts of their operations to parts of the world where costs were lower, such as China and India – that is to say, outsourcing, in its various guises. In general, the objective of reducing costs was met, but there were flies in the ointment, in the form of unexpected issues of language and – yes – time zone. When there are things you need to discuss with your business partners in real time, there’s no point in calling when they are tucked up in bed, sleeping soundly.
So the principal idea behind nearshoring is that you move your business processes to a location that is in the same general region as your business, and hence in a similar time zone, but where the costs are still lower than in your home territory. An added benefit of this is that, in situations where goods have to be transported in one direction or the other, the logistics routes are much shorter.
The geographical location of Colombia almost shouts out its huge benefit in making the country a strategic location for business.
The importance of such issues has been highlighted in recent times, as the world health crisis has strained supply chains to breaking point. In the face of this, companies are looking to establish supply routes that are not only shorter, but more resilient against unforeseen circumstances – in short, to “regionalise” their supply chains. From the point of view of the United States, Mexico is the nearest Latin American country and would be a strong contender for nearshoring, were it not for the fact that the poor relationship between the US and Mexico is anything but conducive to fruitful commercial partnerships.
Another critical factor in considering the nearshoring options is the flexible free-trade agreement that Colombia has with the United States, adding icing to the cake of geographical proximity. This, together with the country’s 114 free trade zones (the second-largest number in Latin America), is powerful medicine.
But does Colombia have a sufficiently skilled and educated workforce to make it feasible for foreign companies to consider moving their operations to the country? Well, yes, it turns out that indeed it does. As a result of its broad range of top-flight universities, research centres and other centres of excellence, Colombia possesses an admirable supply of trained, talented and multilingual people-power – and all at a lower cost than in, for example, Mexico. In the words of Erin Champlin, Vice President of Johnson and Johnson Global Services, which set up major offices in Bogotá, her company chose the location because of the availability of highly educated, multilingual talent and the presence of prestigious universities to recruit from. In fact, Colombia boasts a highly developed academic infrastructure and more than 3,950 research groups in science and technology.
Sectors with investment potential In its mission to facilitate the selection and implementation of appropriate ventures by potential investors, ProColombia has identified an impressive range of opportunities for them to consider. More than 200 such opportunities are scheduled for presentation during CIS 2020, in initiatives spanning areas such as infrastructure, agro-industry, technology and tourism.
Colombia is a country composed of a number of regions, each with its own distinctive characteristics – geographical, commercial, social and academic. Such variety is, in itself, an opportunity, since any prospective investor is highly likely to find the specific features they are looking for in order to set up any given business undertaking. As a very rough guide, the regions of Colombia may be said to excel in the following fields, each ripe with potential for investment:
Bogotá region:technology-based services; business process outsourcing (BPO); creative and cultural industries; cosmetics and personal care; health-related services.
Caribbean region: port infrastructure; film and music festivals; plastics and petrochemicals; metals; agrochemicals; pharmaceuticals; tourism infrastructure (hotels, theme parks, eco-tourism, adventure tourism); beaches; biodiverse landscapes; jungle landscapes.
Central region: coffee cultural landscape (UNESCO World Heritage-recognised); tourist infrastructure; 4.0 industries; IT technology; trained workforce for outsourcing; production of coffee, cocoa, cereals, fruit and vegetables; vehicle parts and accessories.
Pacific region: expanding port infrastructure (multimodal port of Buenaventura); country’s largest agricultural producer; climate for year-round production; Cali international airport; seven free trade zones; academic infrastructure and R&D centres.
Orinoco and Amazon: natural gas and oil reserves; agricultural capacity; biodiversity; tropical jungle; potential for eco-tourism; livestock and meat and dairy products; more than 385 renewable-energy projects.
Eastern region: agro-industrial output (oils, fats, cocoa, dairy products, meat); investment potential for complex health services; advanced health cluster with trained professionals; construction materials (ceramics, clays, stone, glass); geographic location for supplying other Caribbean countries.
What does CIS 2020 consist of?
CIS 2020 promises to be an exciting event, full of potential for initiatives that will be of enormous benefit to those who invest, as well as to Colombia as a whole.
With all that background in mind, what can we expect from the Colombia Investment Summit 2020? As we mentioned earlier, it’s a virtual event taking place over three days in October (from the 7th to the 9th). Attending will be 550 investors from around the world; in total, some 1,200 to 1,500 people are expected to visit. There will be more than 1,000 online business meetings.
The main address will be given by the President of Colombia, Iván Duque. The keynote speaker will be former US president Bill Clinton. On the agenda for Day 1 will be discussions encompassing investment opportunities in Colombia’s regions, and also foreign direct investment and the outlook for capital markets.
Day 2 sees virtual discussions, taking in various sectors that will be of keen interest to potential investors in Colombia: chemicals and life science; infrastructure; tourism and hospitality (including large-scale special tourism projects); and metalworking. Also under discussion will be impact investment in the country.
On Day 3, we can look forward to discussions around the agribusiness sector, the energy sector and 4.0 industries.
Throughout the three days, delegates will have ample opportunity to forge meaningful business alliances by virtue of business meetings with local companies and interaction with projects to be financed, as well as with key entities having involvement in the setting up of businesses in Colombia.
Conclusion
CIS 2020 promises to be an exciting event, full of potential for initiatives that will be of enormous benefit to those who invest, as well as to Colombia as a whole. Colombia has evolved, and will continue to do so as it finds its place in a changing world. Now is a time of great opportunity to participate in meeting the challenges posed by those changes, and help Colombia towards an evolution that will bring benefits to all.
Those who are interested in participating in the virtual event should register with the ProColombia platform. www.colombiainvestmentsummit.co/en
The promotion of exports of non-mining energy goods and services in markets with potential, the expansion of Colombian companies, the attraction of foreign direct investment to Colombia, the positioning of the country as a tourist destination for vacations and meetings and Colombia Country Brand, are the main axes on which PROCOLOMBIA focuses it’s work.
Can you imagine having a perfect life, where everything is peaceful and there are no fights, problems, injuries, or accidents? As amazing as it sounds, living such a life is impossible. Everyone has ups and downs in their lives and one is bound to face complications here and there from time to time.
The intensity of the problems may differ from one person to another, but no life is perfect and trouble-free. You may find yourself unable to solve all the problems you face on your own, which is where hiring or consulting a lawyer such as Oberheiden P.C. would come in handy. On that note, let’s get into six life situations where a good lawyer can save the day.
1. Custody
The notion of divorce is an annoying matter that no one really likes to talk about, however, it is a situation that many people face in their lives. If a married couple agrees that they cannot live under the same roof anymore, they don’t need a lawyer to finalize their divorce. If, however, they get divorced but keep fighting over child custody, a lawyer needs to interfere. Custody problems are vast and cannot be solved unless there is a lawyer who can deal with the matter professionally. Usually, both parents turn to an attorney as they can’t see eye to eye. A lawyer can solve custody-related issues, especially if your ex prevents you from seeing your kids or if you believe that your little ones are in danger of living under their supervision.
2. Accidents
If you have ever been involved in a car accident, surely you know how terrifying the experience is. No matter how serious or light the accident is, the situation leaves you in utter shock. If you were injured in a car crash, you should call your attorney immediately. First, you should make sure that the injury is not serious and if it was, you should call for help. In New York, an injured person can seek legal help to sue the irresponsible driver who caused the injury. If you live in Hempstead, you can get in touch with a personal injury attorney who can sue the other driver and help you receive good compensation.
3. Work Conflicts
It is not uncommon that you find countless problems at your workplace. From salary deductions to racial discrimination you can come across loads of different problems at work. Because not all companies adhere to labor law, numerous employees may suffer from the consequences. You might also face disputes over your contract; something that can end your career in the blink of an eye. When you face any of these situations you should have legal representation against your employer, who is going to have a lawyer himself.
4. Driving Under Influence
You will be in huge trouble if you drive under the influence of alcohol or drugs. You may have to pay a fine, loss of your driving license, carry out jail time, or all three combined. Therefore, you should consult a lawyer such as Austin DWI lawyer immediately in this case.
The lawyer will be able to reduce any changes to a small fine or maybe dismiss all charges. You should never attempt to go to court without an attorney unless you wish to accept the charges.
5. Deaths and Wills
The disputes that can happen over someone’s will can be dramatic and messy. Avoid the drama by hiring a lawyer to help you with your will or trust; when you are no longer alive, your family won’t fight over your will that has been set up by an attorney. The best way to do this is to hire a lawyer when you have your first child to set up your will and adjust it according to new circumstances or the birth of new children.
6. False Accusations
All of a sudden you might find out that you’ve been sued for a certain amount of money or an aggravated assault. If you and everyone around believe these accusations to be false, you still need a professional lawyer to prove this in court. You cannot defend yourself against any charges unless you’re a lawyer yourself.
As we get older and face life head-on, we soon realize that adulthood can sometimes be pretty complex. There are numerous occasions where you may face ample problems that you cannot resolve on your own. This is where you need to seek professional help. You’ll need a qualified lawyer to represent and defend you should unfortunate circumstances occur. If you are faced with the above 6 life situations, don’t hesitate to hire a lawyer.
The coronavirus pandemic has caused huge disruption for businesses in the UK and around the world, with extraordinary trading conditions severely testing even the strongest of companies.
In fact, figures published by market and consumer data provider, Statista, show that in April 2020 almost a quarter of all businesses in the UK paused trading or closed temporarily due to COVID-19.¹
When trade ceases so abruptly it’s extremely challenging for even the most streamlined and agile businesses to carry on, but what are the specific problems that businesses are dealing with due to coronavirus?
What problems are businesses experiencing due to COVID-19?
Inability to operate effectively, if at all
Social distancing and the national/local lockdowns have made it impossible for some businesses to trade – particularly those reliant on footfall and the physical presence of their customers.
Staff shortages due to ill health/self-isolation
Ill health among employees, and the ensuing self-isolation or quarantine, has led to huge uncertainty – businesses can’t plan effectively due to uncontrollable and unmanageable staff shortages and workforce disruptions.
Reduction in customer demand and decreased revenues
Considerably reduced footfall and a change in customer buying habits have significantly reduced revenues, leading to severe cash shortages for many businesses. Some have also experienced problems securing vital finance, being rejected for the Coronavirus Business Interruption Loan Scheme (CBILS) or the Bounce Back Loan Scheme (BBLS).
Pressure from creditors
With such widespread financial fragility businesses have come under severe pressure from their creditors to pay monies owed, and the ever-present risk of being wound up by a creditor remains.
The virus hasn’t gone away, and with a further surge predicted over the coming months what can businesses learn from the initial wave that was so shocking. Also, how can they introduce new working practices and safeguards to protect themselves in the future?
How can businesses overcome Covid-19 trading conditions?
Streamlining
A streamlined business is agile and able to change direction quickly when needed. Streamlining measures could include:
Cutting costs – selling non-essential assets and ensuring that all outgoing revenues are reasonable and necessary
Using new technology – modernising or updating business software, and making sure staff working from home are doing so securely and efficiently
Changing working hours/the working week – staggering shifts or rotas so employees face less risk of contracting the virus
Eliminating non-essential tasks and workflows to save time and financial resources
Reporting
It’s essential for business owners and directors to know and understand the figures, including:
How much cash is required to survive for the next month/six months/a year
Whether there will be any cash shortages in the coming months, and if so, when
Whether stock levels can be controlled so that vital cash isn’t tied up in inventory
The current profit and loss situation and balance sheet position – vital information that warns of approaching insolvency
Additional funding
Consideration should be given to any government-backed schemes and loans that could support the business and provide valuable additional funding to survive the coming months. Alternative sources of finance, including merchant cash advances and invoice finance, may also be appropriate.
Building resilience
Building resilience involves focused planning, potentially involving new technology, and adapting operations to meet changing customer demands/business needs. This makes the business better able to withstand the financial pressure that’s likely to continue for some time. The viability of existing suppliers should also be explored, with research into potential new suppliers providing valuable reassurance that the business can carry on if a key supplier fails.
Professional insolvency support
Early insolvency advice is crucial as it allows businesses to act quickly and with confidence in the face of adversity. A greater choice of options may be available if action is needed – informal negotiations with creditors, for example, or entering an official insolvency procedure. The UK operates a strong insolvency regime with supportive rescue and restructuring procedures available, including fast track CVA (Company Voluntary Arrangement) – just one route that provides protection from creditors.
What happens when a business has to close due to Covid-19?
If a business has to close due to Covid-19, any assets will be sold off to repay creditors – a process called liquidation. There are two types of insolvent liquidation in the UK:
Compulsory liquidation whereby a creditor obtains a winding up order from the court
Creditors’ Voluntary Liquidation (CVL), which is initiated by company directors
Creditors’ Voluntary Liquidation is a better option, as UK insolvency law requires directors to prioritise the interests of creditors when the company becomes insolvent. If they wait for a creditor to wind up the company, directors don’t fulfil their statutory duties and could be held personally liable for additional creditor losses.
A CVL also offers eligible directors the chance to claim redundancy pay. So what happens during the liquidation process, and how does a business close down in these circumstances?
Business liquidation and closure
When a business enters liquidation, a licensed insolvency practitioner (IP) is appointed to administer the process. The liquidator deals with company contracts, informs creditors of the business’ financial situation, sells company assets, and distributes the funds to creditors.
At the end of the process the company is struck off the register at Companies House and no longer exists. Additionally, directors undergo investigations by the liquidator to ensure no wrongdoing has taken place during the time leading up to insolvency.
Planning ahead for a new business trading environment
The business world has been forced into action by Covid-19. Actions that businesses may have been planning to implement in the coming years – working from home, new technology, or general streamlining – have had to be fast-tracked due to the pandemic.
Operating in a new trading environment that nobody could have predicted is certainly challenging, but there’s still time to implement protective measures. With a little support, businesses will be able to trade with more confidence, less risk of closure, and with an eye to the future rather than to the past.
The article “Data Overtakes Oil as Leading (Geopolitical) Global Commodity” published three years ago became the subject of much debate and deliberation. At the time, many economists and political commentators decried the notion as nonsense – and some still do. “Data, the leading reason why tech exists in today’s world has overtaken oil as the number one traded global commodity and is now worth exactly double budgeted global defence spending. Like oil and military spending, data is the new geopolitical ammunition of the 21st century.” Whilst that statement is now recognised by just about everyone as common knowledge, Graham Vanbergen stresses the next big shift to take place will be just as rapid, game-changing and threatening. (1)
The reality is that data today is not just the main driver of everything from shipping to science, from shopping to share-dealing, it is about to change the way we live. It will change our understanding of economics, health, national security, politics, geopolitics and even the principles of democracy.
It is nothing new to say that the biggest corporations in the world by revenue manage everything from energy, retail, automotive, healthcare, commodities, financials, telecommunications and pharmaceuticals – and they so with one common factor – data. What happens next though will somehow surprise us all once again, like the 2008 financial crash and the Covid pandemic did.
The fine balance of international trade agreements that dominates agreed flows of goods and services are showing signs of stress and decay. For instance, the World Trade Organisation started life as GATT in 1948 and required overhauling in 1995. As the World Trade Organisation selects a new director-general this month, the Geneva-based group will be faced with one acute challenge: that there is no longer a great deal for support for it. Frank Lavin, CEO of Export Now says – “For its part, the WTO is faulted for its inability to complete a trade round… with no successful trade-rounds for 25 years. To put it politely, the WTO is not designed for success. Unlike the World Bank or the IMF, the WTO has no weighted voting based on a member’s economic role or financial contribution. (2)
The WTO is really designed for textiles, food, cars and commodities – but not artificial intelligence, software and big data – and unlike the former, the latter can be transported in seconds to anywhere in the world, with or without international or domestic governance. These new products are now challenging the institutions that support civil society and chips away at protective laws that govern such things as economic activity, workers terms and conditions, privacy, democracy and the making of geopolitical decisions. It will challenge the very basis of our understanding of not just how our economies are shaped but also how our democracies evolve in the years ahead.
For context, in the last two years alone, an astonishing 90 per cent of the world’s data has been created. Approximately 2.5 quintillion bytes of data are now produced by humans every day, 40 per cent of which, is now machine-generated. By the end of next year, the entire digital universe will be ten times the size of what it was this year at the beginning of this year as exponential growth continues. Systems have gone from storing gigabytes to petabytes and then on to zettabytes (one trillion gigabytes) and now yottabytes (1,200 zettabytes). (3)
Whilst the digital age was getting a firm and steady grip of every aspect of our lives, a market accelerator unexpectedly appeared. We have witnessed how economies are rapidly changing as a result of the Covid19 pandemic. It’s not just the obvious like traditional bricks and mortar shops being rapidly replaced with online retail, it’s telemedicine, fin-tech and home-working. Many businesses are rapidly digitising their operations. Those that don’t quickly evolve face extinction as their competitive edge is snatched from underneath them.
More regulated countries, face the dilemma of falling behind. One example is how the ubiquitous state surveillance system in China has not only shaped how the state delivers public services but also how to control, punish and administer its citizenry, and in so doing, cornered the global facial recognition systems market now being sold to countries all over the world.
This then leads on to concerns over democracy and national security and the inherent risk of geopolitical fallout. Technology can be as regulatory free and borderless as two parties desire. Take for instance Palantir Technologies. It is a private American software company that specialises in big data analytics. It was born in the intelligence community, initially funded by America’s huge Department of Defence, given additional seed-funding by the CIA and is used extensively by the National Security Agency. It helps to manage America’s warfare monitoring, counter-terrorism observation and was the architect of GhostNet, a cyber-espionage network that targeted the UN and various national embassies – alongside hacking operations of foreign defence systems. It played a starring role in the huge Facebook/SCL Elections scandal that dragged Brexit over the line in 2016, which required just 1.2 million votes to get a 48/52 per cent result. Brexit has already cost the UK economy £200bn in just four years. It divided the nation, fallen out with its European partners, driven its government to break international trade agreements and laws, threatens the Union and ultimately threatens the future prospects of what was once one of the worlds most stable democracies. Unashamedly, Palantir has just filed to become a listed company on the NY stock exchange to use all of that experience in areas such as data collection for democratic outcomes and managing crucial aspects of public health. (4)
Social media is another seemingly uncontrollable threat. These companies have the ability to undermine and frustrate governments’ ability to manage anything at all – as evidenced recently over the pandemic. It is a matter of documented fact that social media has eroded trust in democracy and the institutions that uphold it all over the world. All of these things are now happening all over the world, all of the time – to a greater or lesser degree.
Traditional trade agreements do not cover these new technologies and even if they did, they would be outsmarted in short shrift. Whilst it seems like common sense to have a common response for greater regulatory international coordination, enforcement will always lag behind. For instance, regulations can be undermined by companies operating from jurisdictions with laxer rules. Profit offshoring proves that point, now it is known that something like $32trillion sits in bank accounts located in tax havens. Another example is Britain’s Electoral Commission. The governing body, was not just unprepared for what happened in the 2016 EU referendum, but to this day it still has not worked out how to defend democracy against a new wave of technology that knows no borders.
The global reality is that there is a fight on for technical supremacy – and it is this that drives the lack of international regulatory frameworks in the first place.
Hyper-globalised economies were exposed for their weaknesses in a global pandemic. Programmes to move from service delivery to localised resilience are already underway in many countries. Sustainability is now a key factor for shareholders and investors with a new top investment priority that centres around the environment, society, and governance. (5)
The big problem with the coming technology spike is that basic principles should apply to every country – at least in Western democracies – but they don’t and won’t. That point is made by Dani Rodrik, Professor of International Political Economy at Harvard University’s John F. Kennedy School of Government, who says – “Countries may devise their own regulatory (technology) standards and define their own national security requirements. They may do what is required to defend these standards and their national security, including through trade and investment restrictions. But they have no right to internationalise their standards and try to impose their regulations on other countries.” Many high profile commentators echo this position.
There was a time when international trade was relatively simple. Products were shipped to mutually benefit both parties in the transaction. But hyper-globalisation ended up with trade imbalances that heavily favoured one against the other. The trade between America and China is worth around $650bn annually – well over $400bn is in China’s favour. Whilst Trump stokes his trade war, it was American corporations that off-shored its workforce to gain the upper hand against their own domestic competitors. It was unfettered competition that drove a wedge between corporations and an embittered workforce. The result then was financially distressed households supporting a populist whose wrecking tactics of the world order are cheered on. America is now heavily focused on fighting the tech supremacy war.
Take for instance Huawei. There is no real tangible evidence that it has (or has not) engaged in state-sponsored spying or surveillance and yet America is crushing its advances by legislating against the use of its products, against it acquiring US-based companies and anyone selling chips to its supply chain anywhere in the world. In so doing, America is creating very adverse side effects for national telecoms companies (170 countries already use Huawei’s products). Many countries are now facing the prospect of extracting installed systems and going to the expense of acquiring and installing new and more expensive ones. To all intents and purposes, America is using this as an economic weapon across the world to beat back just one company. It not only wants to stop Huawei from becoming a global force, it wants to stop China from gaining the upper hand. This alone is a warning that the global system of governance, of trade, of cooperation is coming to an end in a bid for technical supremacy.
What can we reasonably expect from this new world disorder? The regulatory framework we have known has already started fracturing. By its very nature, technology’s own advancement has a systems architecture designed to do one thing – beat the system.
Greatness is no accident. Successful business leaders don’t just roll out of bed and hope for sunny weather.
They plan, prepare and perform with perfect consistency. This approach begins as soon as they wake up. What happens next mostly revolves around getting healthy, happy and organized for the day ahead. To help you do the same, consider these morning routine hacks for successful business leaders.
Wake Up Early
Before you even decide how many hours to dial back your alarm, make note of when you fall asleep in the first place. If you plan to rise and shine at 5:00 am, you should be dreaming by around 9:30 pm.
Evenings are typically our least productive time, while mornings are the most demanding. It makes sense to try and complete as many tasks as possible the night before. This way, you’ll have more time in the morning to do the things that matter and enjoy the sunrise feeling a little less stressed.
You don’t necessarily have to start each day pumping iron or running marathons. Yoga, Pilates, stretching and similar activities are just as powerful. We all know that exercise has an immense impact on quality of life. Following a simple workout routine in the mornings will help you feel better, think clearer and move faster.
Meditation or deep breathing can also be added to your schedule. Just a few minutes of mindfulness is capable of controlling anxiety, enhancing awareness, improving attention span, reducing memory loss and so much more.
Eat That Frog
Based on the Brian Tracy book of the same name, the concept of eating the frog is simple. Instead of leaving it for later, complete your most difficult “frog” task first. This gets it out of the way and staves off the associated stress. Additionally, you may find that everything you tackle afterwards feels much easier.
Set Your Aim
It should go without saying that it’s crucial to map out the direction of your day. After all, how else will you know if you’re headed down the right path? Dedicate at least 10 minutes to establishing your goals and reviewing your responsibilities for the day ahead. Don’t forget to allot times for breaks – they also matter.
Take Power Showers
Even the fiercest business leaders are guaranteed to tremble when taking on the mighty cold shower. It’s good to know that the torturous task of forgoing warm water has serious benefits. This includes increasing endorphin production, which makes you feel more alert, alive and optimistic. Cold showers are also known to:
Improve metabolism
Increase circulation
Fight common illness
Enhance skin and hair health
Eat Breakfast
The premise of having to take a chunk out of your morning time just to eat something can make it enticing to forgo breakfast entirely. However, there are many healthy foods that require little to no preparation and serve as the perfect way to start your day. This includes blueberries, oatmeal, chia seeds, nuts and Greek yoghurt.
Aim to have more protein and less sugar. The latter spikes your energy levels before bringing them down to a crash, while protein sustains you for longer.
Have That Coffee
Many entrepreneurs refuse to start their day without completing their coffee-making ritual. As long as you avoid harmful additives, a cup of Joe can be safely included in your morning routine. Green tea, which also contains caffeine, is a healthy alternative.
From here, it’s as simple as making the necessary adjustments and sticking to the schedule you set. It won’t be long before you get used to the changes.
By Terence Tse
CFOs are evolving into AI-driven transformation orchestrators, balancing finance, technology, and strategy while upskilling teams, managing risks, and driving measurable business value.
A key insight from this year’s AI for CFOs event, organized...
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Technology to Fracture Global Trade and Relations
By Graham Vanbergen
The article “Data Overtakes Oil as Leading (Geopolitical) Global Commodity” published three years ago became the subject of much debate and deliberation. At the time, many economists and political commentators decried the notion as nonsense – and some still do. “Data, the leading reason why tech exists in today’s world has overtaken oil as the number one traded global commodity and is now worth exactly double budgeted global defence spending. Like oil and military spending, data is the new geopolitical ammunition of the 21st century.” Whilst that statement is now recognised by just about everyone as common knowledge, Graham Vanbergen stresses the next big shift to take place will be just as rapid, game-changing and threatening. (1)
The reality is that data today is not just the main driver of everything from shipping to science, from shopping to share-dealing, it is about to change the way we live. It will change our understanding of economics, health, national security, politics, geopolitics and even the principles of democracy.
It is nothing new to say that the biggest corporations in the world by revenue manage everything from energy, retail, automotive, healthcare, commodities, financials, telecommunications and pharmaceuticals – and they so with one common factor – data. What happens next though will somehow surprise us all once again, like the 2008 financial crash and the Covid pandemic did.
The fine balance of international trade agreements that dominates agreed flows of goods and services are showing signs of stress and decay. For instance, the World Trade Organisation started life as GATT in 1948 and required overhauling in 1995. As the World Trade Organisation selects a new director-general this month, the Geneva-based group will be faced with one acute challenge: that there is no longer a great deal for support for it. Frank Lavin, CEO of Export Now says – “For its part, the WTO is faulted for its inability to complete a trade round… with no successful trade-rounds for 25 years. To put it politely, the WTO is not designed for success. Unlike the World Bank or the IMF, the WTO has no weighted voting based on a member’s economic role or financial contribution. (2)
The WTO is really designed for textiles, food, cars and commodities – but not artificial intelligence, software and big data – and unlike the former, the latter can be transported in seconds to anywhere in the world, with or without international or domestic governance. These new products are now challenging the institutions that support civil society and chips away at protective laws that govern such things as economic activity, workers terms and conditions, privacy, democracy and the making of geopolitical decisions. It will challenge the very basis of our understanding of not just how our economies are shaped but also how our democracies evolve in the years ahead.
For context, in the last two years alone, an astonishing 90 per cent of the world’s data has been created. Approximately 2.5 quintillion bytes of data are now produced by humans every day, 40 per cent of which, is now machine-generated. By the end of next year, the entire digital universe will be ten times the size of what it was this year at the beginning of this year as exponential growth continues. Systems have gone from storing gigabytes to petabytes and then on to zettabytes (one trillion gigabytes) and now yottabytes (1,200 zettabytes). (3)
Whilst the digital age was getting a firm and steady grip of every aspect of our lives, a market accelerator unexpectedly appeared. We have witnessed how economies are rapidly changing as a result of the Covid19 pandemic. It’s not just the obvious like traditional bricks and mortar shops being rapidly replaced with online retail, it’s telemedicine, fin-tech and home-working. Many businesses are rapidly digitising their operations. Those that don’t quickly evolve face extinction as their competitive edge is snatched from underneath them.
More regulated countries, face the dilemma of falling behind. One example is how the ubiquitous state surveillance system in China has not only shaped how the state delivers public services but also how to control, punish and administer its citizenry, and in so doing, cornered the global facial recognition systems market now being sold to countries all over the world.
This then leads on to concerns over democracy and national security and the inherent risk of geopolitical fallout. Technology can be as regulatory free and borderless as two parties desire. Take for instance Palantir Technologies. It is a private American software company that specialises in big data analytics. It was born in the intelligence community, initially funded by America’s huge Department of Defence, given additional seed-funding by the CIA and is used extensively by the National Security Agency. It helps to manage America’s warfare monitoring, counter-terrorism observation and was the architect of GhostNet, a cyber-espionage network that targeted the UN and various national embassies – alongside hacking operations of foreign defence systems. It played a starring role in the huge Facebook/SCL Elections scandal that dragged Brexit over the line in 2016, which required just 1.2 million votes to get a 48/52 per cent result. Brexit has already cost the UK economy £200bn in just four years. It divided the nation, fallen out with its European partners, driven its government to break international trade agreements and laws, threatens the Union and ultimately threatens the future prospects of what was once one of the worlds most stable democracies. Unashamedly, Palantir has just filed to become a listed company on the NY stock exchange to use all of that experience in areas such as data collection for democratic outcomes and managing crucial aspects of public health. (4)
Social media is another seemingly uncontrollable threat. These companies have the ability to undermine and frustrate governments’ ability to manage anything at all – as evidenced recently over the pandemic. It is a matter of documented fact that social media has eroded trust in democracy and the institutions that uphold it all over the world. All of these things are now happening all over the world, all of the time – to a greater or lesser degree.
Traditional trade agreements do not cover these new technologies and even if they did, they would be outsmarted in short shrift. Whilst it seems like common sense to have a common response for greater regulatory international coordination, enforcement will always lag behind. For instance, regulations can be undermined by companies operating from jurisdictions with laxer rules. Profit offshoring proves that point, now it is known that something like $32trillion sits in bank accounts located in tax havens. Another example is Britain’s Electoral Commission. The governing body, was not just unprepared for what happened in the 2016 EU referendum, but to this day it still has not worked out how to defend democracy against a new wave of technology that knows no borders.
The global reality is that there is a fight on for technical supremacy – and it is this that drives the lack of international regulatory frameworks in the first place.
Hyper-globalised economies were exposed for their weaknesses in a global pandemic. Programmes to move from service delivery to localised resilience are already underway in many countries. Sustainability is now a key factor for shareholders and investors with a new top investment priority that centres around the environment, society, and governance. (5)
The big problem with the coming technology spike is that basic principles should apply to every country – at least in Western democracies – but they don’t and won’t. That point is made by Dani Rodrik, Professor of International Political Economy at Harvard University’s John F. Kennedy School of Government, who says – “Countries may devise their own regulatory (technology) standards and define their own national security requirements. They may do what is required to defend these standards and their national security, including through trade and investment restrictions. But they have no right to internationalise their standards and try to impose their regulations on other countries.” Many high profile commentators echo this position.
There was a time when international trade was relatively simple. Products were shipped to mutually benefit both parties in the transaction. But hyper-globalisation ended up with trade imbalances that heavily favoured one against the other. The trade between America and China is worth around $650bn annually – well over $400bn is in China’s favour. Whilst Trump stokes his trade war, it was American corporations that off-shored its workforce to gain the upper hand against their own domestic competitors. It was unfettered competition that drove a wedge between corporations and an embittered workforce. The result then was financially distressed households supporting a populist whose wrecking tactics of the world order are cheered on. America is now heavily focused on fighting the tech supremacy war.
Take for instance Huawei. There is no real tangible evidence that it has (or has not) engaged in state-sponsored spying or surveillance and yet America is crushing its advances by legislating against the use of its products, against it acquiring US-based companies and anyone selling chips to its supply chain anywhere in the world. In so doing, America is creating very adverse side effects for national telecoms companies (170 countries already use Huawei’s products). Many countries are now facing the prospect of extracting installed systems and going to the expense of acquiring and installing new and more expensive ones. To all intents and purposes, America is using this as an economic weapon across the world to beat back just one company. It not only wants to stop Huawei from becoming a global force, it wants to stop China from gaining the upper hand. This alone is a warning that the global system of governance, of trade, of cooperation is coming to an end in a bid for technical supremacy.
What can we reasonably expect from this new world disorder? The regulatory framework we have known has already started fracturing. By its very nature, technology’s own advancement has a systems architecture designed to do one thing – beat the system.
About the Author
References
(1) The European Financial Review: Data Overtakes Oil as Leading (Geopolitical) Global Commodity
(2) Forbes: Can The WTO Be Saved?
(3) TechJury: How much data is created
(4) Wikipedia: Palantir Technologies
(5) Harvard Business Review: The Investor Revolution