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31

Bank Loan / Govt creates 'Land Bank' for economic zones

« on: September 17, 2018, 07:00:45 PM »

Govt creates 'Land Bank' for economic zones


Principal Coordinator on SDG Affairs in Prime Minister's Office Md Abul Kalam Azad on Thursday said the government has created a 'land bank' of one lakh acres for establishing economic zones, especially in the south belt, of which 35,000 acres have already been acquired and handed over to BEZA.
"The government has done a mapping in line with the goals and targets of SDGs and the ministries concerned have been given the tasks of implementation," he added.
Azad was speaking as chief guest at a round table discussion on "Potential Roles and Challenges of Private Sector to Achieve Sustainable Development Goals" organized by Dhaka Chamber of Commerce and Industry (DCCI)at DCCI auditorium, said a press release.
Emphasizing the need of resource mobilization for financing issues and skill development, he urged the private sector to invest in the economic zones and said: "The government will facilitate the private sector by providing electricity and gas".
The Principle coordinator also asserted that the present GDP growth has been achieved because of the private sector.
Metropolitan Chamber of Commerce and Industry (MCCI) President Barrister Nihad Kabir and Chittagong Chamber of Commerce and Industry (CCCI) President Mahbubul Alam were present as special guests while former DCCI President Asif Ibrahim moderated the open discussion session.
Senior Research Fello of BIDS Dr. Nazneen Ahmed presented a keynote paper. She highlighted how the goals of SDG 8, 9 and 12 are directly linked with the private sector.
"To explore our own market, we have to increase our investment," said Nazneen, adding, "In order to increase investment, corporate tax rate should be reduced along with establishment of a long-term regulatory framework."
Nihad Kabir said a participatory role both from public and private sector will expedite the work to achieve SDGs. She laid emphasis on technology and vocational education.
Mentioning that financing for SDG will not be a problem as Bangladesh may try to get the Green Climate Fund, the MCCI president underscored the importance of a transparent long-term regulatory framework.
To attain SDGs, strong institutional mechanism involving all stakeholders including public representatives, government, private sector, civil society, knowledge community and development partners are required, opined Mahbubul Alam.
In the welcome address, DCCI President Abul Kasem Khan said under SDGs, Bangladesh requires intense focus on employment generation for institutional capacity building.
He also pointed out the challenges that the private sector are facing such as want of affordable and reliable energy sources, inadequate technology, expensive compliance and preparedness measures, climate change impacts, outdated infrastructure facilities, high cost of doing business, weak regulatory framework including business process and lack of institutional capacity.
"We need policy continuity, consistency and cohesiveness for more engagement of private sector in attaining SDGs," he added.
CDP Senior Research Fellow Towfiqul Islam Khan, Director of Multimode Group Tafsir Mohammed Awal and PRI Research Director Dr. MA Razzaque were present as panel discussants.

http://thedailynewnation.com/news/188646/govt-creates-land-bank-for-economic-zones.html

32

Newspaper / WB confirms $510m loan to improve secondary education

« on: August 14, 2018, 08:12:07 PM »

WB confirms $510m loan to improve secondary education
 FE Online Report | Published:  August 13, 2018 18:49:26 | Updated:  August 14, 2018 09:16:51


The World Bank has confirmed $510 million loan to enhance the quality and effectiveness of secondary education system of Bangladesh.

Bangladesh government and the Washington-based lender signed a loan agreement on Monday in this regard.

World Bank Acting Country Director Rajashree Paralkar and ERD secretary Kazi Shofiqul Azam signed the deal at the Economic Relations Division (ERD) in Dhaka.

“This will benefit 13 million students studying in grades 6-12,” the World Bank said in a statement on Monday.

The government will utilise the loan for the US$17 billion cost “Secondary Education Development Program (SEDP)”.

It will focus on improving education quality and access, and that students — especially girls and children from low-income households — complete secondary education. For this, the program will support stipends and school grants.

The program will provide training to 500,000 school teachers and school principals to enhance quality of secondary education.

It will also support learning assessments of students in grade 6, 8 and 10 to identify learning gap and suggest policy actions.

The Global Financing Facility (GFF) will provide a $10 million grant, which is aimed at improving adolescent health and school retention.

The programme will construct separate toilets for girls. In addition, the program will also support incorporating topics on general health and hygiene in the curriculum.

The credit from the WB’s soft window – the International Development Association, which provides loan at 0.75 per cent interest rate with a 38-year maturity including a six-year grace period.

The World Bank has so far committed nearly $28 billion in grants and interest-free credits to the country. In recent years, Bangladesh has been among the largest recipients of the World Bank’s interest-free credits.

kabirhumayan10@gmail.com

https://thefinancialexpress.com.bd/economy/bangladesh/wb-confirms-510m-loan-to-improve-secondary-education-1534164566

33

Newspaper / ECNEC approves Tk 8.26b livelihood programme

« on: August 14, 2018, 08:10:21 PM »

ECNEC approves Tk 8.26b livelihood programme
Published:  August 14, 2018 15:25:53

Prime Minister Sheikh Hasina also the chairperson of ECNEC presides over its 5th meeting held today at capital’s Sher-e-Bangla Nagar. Focus Bangla photo
The Executive Committee of the National Economic Council (ECNEC) today (Tuesday) approved the ‘Improvement of Livelihood of Marginal Communities Programme’ at an estimated cost of Tk 8.2612 billion.

The programme is aimed at providing housing to some 20,000 ultra-poor families in city corporations and municipal areas side by side with reducing urban poverty.

The approval came at the 5th ECNEC meeting of the current fiscal year held in the NEC Conference Room in the capital’s Sher-e-Bangla Nagar area with ECNEC Chairperson and Prime Minister Sheikh Hasina in the chair.

Briefing the reporters after the meeting, Planning Minister AHM Mustafa Kamal said a total of 9 projects were approved today involving an overall estimated cost of Tk 30.8835 billion.

“Of the total project cost, Tk 23.3988 billion will come from the GoB portion, Tk 0.5054 billion from the organisation’s own fund while the rest of Tk 6.9793 billion from project assistance,” he said. All the approved nine projects are new schemes.

The planning minister said the DFID and UNDP would provide about Tk 6.98 billion as grants, with the government providing the rest.

The project will be implemented by the Local Government Division by February 2023.

According to the project proposal, each of some 5,000 ultra-poor families will be given a two-room flat free of cost, while 15,000 ultra-poor families will be given interest-free long term housing loans under community housing development fund.

The 20,000 families will be provided with basic services like water connections, sanitation, drainage and approach road facilities under the project.

The flats and house building facilities will be given to residents of 11 city corporations and 25 municipalities, particularly those located along coastal areas and at high risk of being affected by climate change.

The planning minister said the project was first placed before today’s meeting with the title ‘National Urban Poverty Reduction Programme’. But, Prime Minister Sheikh Hasina in the meeting changed the title of the project to ‘Improvement of Livelihood of Marginal Communities’.

The prime minister also directed the authorities concerned to make separate arrangements of kitchen and toilet facilities for the project beneficiaries side by side strictly maintaining the waste management in a planned and disciplined way.

The project proposal said, due to institutional weakness and financial limitations of the city corporations and municipalities in the poor slums in the cities, providing civil facilities have become a big challenge.

For this, municipalities and city corporations in coastal areas where the risk of climate change is more have been brought under the project at the primary stage, reports BSS.

Based on primary success, other municipalities will also be brought under the project.
https://thefinancialexpress.com.bd/economy/bangladesh/ecnec-approves-tk-826b-livelihood-programme-1534238753

34

Venture Capital / Small Capital Board in the offing

« on: August 14, 2018, 08:07:47 PM »

Small Capital Board in the offing
Venture Capital Assoc members meet BSEC chairman
 FE Report | Published:  August 13, 2018 22:22:10 | Updated:  August 14, 2018 10:30:06

VCPEAB Chairman & General Partner of Fenox Venture Capital Shameem Ahsan, Secretary General of VCPEAB and Managing Director of BD Venture Limited Shawkat Hossain and, Founder and Managing Director of Maslin Capital Limited Waliul Maruf Matin seen in the meeting with Chairman of Bangladesh Securities and Exchange Commission (BSEC) Dr. M. Khairul Hossain on Monday
A Small Capital Board will be formed soon to facilitate small capital companies to raise funds through initial public offerings (IPOs).

Chairman of Bangladesh Securities and Exchange Commission (BSEC) Dr. M. Khairul Hossain disclosed this during a meeting with Venture Capital and Private Equity Association of Bangladesh (VCPEAB) at BSEC in the capital on Monday.

VCPEAB Chairman & General Partner of Fenox Venture Capital Shameem Ahsan led the delegation.

With the introduction of the Small Capital Board, a company can apply for IPO if it has a minimum existing paid-up capital of Tk 50 million, intends to raise its paid-up capital by at least Tk 50 million through Qualified Investor Offer (QIO) and after QIO, its paid-up capital stands below Tk 300 million.

Now to apply for an IPO, a company requires Tk 300 million as paid-up capital and profitability for past three years, among other criteria.

The BSEC chairman said, "We have come a long way in implementing the rules for Qualified Investor Offer by small capital companies. We have already issued the gazette and are in the process of forming the Board with stock exchanges by our side. This will also raise the depth of the stock market."

VCPEAB Chairman Shameem Ahsan, said "Access to finance is a major challenge for young entrepreneurs and startups due to unavailability of bank loans. It was difficult for IT firms to opt for IPO, as they have lower paid-up capital and focus on growth rather than profitability."

He said the formation of this Small Cap Board presents a viable exit strategy for Venture Capital Firms and Investment Bankers, making the technology industry more lucrative. "We are hopeful that their increased participation will benefit the   thriving tech entrepreneurs and startups of Bangladesh," he added.

From BSEC, also present were Dr. Swapan Kumar Bala, FCMA, Commissioner; Shawkat Hossain, Secretary General, VCPEAB and Managing Director of BD Venture Limited; Mr. Waliul Maruf Matin, Founder and Managing Director of Maslin Capital Limited; and Mr. Nazmul Karim, Investment Manager, Aavishkaar Frontier Fund (Bangladesh).

raihanmchowdhury@gmail.com

https://thefinancialexpress.com.bd/stock/small-capital-board-in-the-offing-1534177330

35

Networking & Events / Jack Ma Announces $10M African 'Netpreneur' Prize

« on: August 14, 2018, 09:50:26 AM »

36

Newspaper / ECNEC approves nine projects worth Tk 75.39b

« on: August 07, 2018, 09:43:34 PM »

ECNEC approves nine projects worth Tk 75.39b
Published:  July 29, 2018 15:49:26 | Updated:  July 31, 2018 20:31:15

Photo Courtesy: Focus Bangla
The Executive Committee of the National Economic Council (ECNEC) on Sunday approved nine projects involving Tk 75.39 billion.

The approval came from an ECNEC meeting held at NEC conference room with Ecnec Chairperson and Prime Minister Sheikh Hasina in the chair.

Briefing reporters after the meeting, Planning Minister AHM Mustafa Kamal said, “A total of nine projects were approved today involving an overall cost of Tk 75.39 billion (7,539.13 crore).”

Of the total estimated cost, he said, Tk 67.52 billion (6,751.66 crore) will come from the national exchequer, while Tk 5.29 billion (528.90 crore) as project assistance and Tk 2.59 billion (258.57 crore) from the own funds of the organisations concerned.

Eight of the projects are new while another is revised one, reports UNB.

In terms of cost, the biggest project is “Expansion of Science Education’s Scope in Government Colleges Project" involving Tk 25.12 billion (2,511.51 crore).”


http://thefinancialexpress.com.bd/economy/bangladesh/ecnec-approves-nine-projects-worth-tk-7539b-1532857933

37

Big Data / Singapore tests eye scans at immigration checkpoints

« on: August 07, 2018, 09:37:25 PM »

Singapore tests eye scans at immigration checkpoints
Published:  August 07, 2018 13:15:05

Internet photo
Singapore has started scanning travellers’ eyes at some of its border checkpoints, its immigration authority said on Monday, in a trial of expensive technology that could one day replace fingerprint verification.

It is the latest in a series of high-tech initiatives in the city-state, some of which have stoked privacy concerns among rights advocates, aimed at improving efficiency and security as the threat of militancy in the region has ratcheted up.

Iris-scanning technology, which has been used in other countries like the United States and the United Kingdom with varying degrees of success, can cost five times more than existing fingerprint systems, according to experts.

“The trials will help us in our consideration of whether and how we should implement such technology at our checkpoints,” the Immigration & Checkpoints Authority (ICA) said in an emailed statement.

The move will be implemented at two checkpoints on its northern border with Malaysia and one at a ferry terminal running services to nearby Indonesian islands.

The ICA has been collecting iris images from Singaporean citizens and permanent residents when they apply for identity cards or a passport since January last year.

Singapore’s Changi Airport is considering using facial recognition systems to find late passengers and the country also plans to use facial recognition capabilities in a project to fit cameras and sensors on over 100,000 lampposts, reports Reuters.

Singapore’s government says these measures are pragmatic ways to improve people’s lives and safety and has pledged to be sensitive to privacy.

The cosmopolitan financial hub says it has been the target of militant plots for years, some stemming from its Muslim-majority neighbours, and that it is a matter of ‘when’ and not ‘if’ militants will strike.
https://thefinancialexpress.com.bd/sci-tech/singapore-tests-eye-scans-at-immigration-checkpoints-1533626105

38

Smart Agriculture & Life Science / Govt to invest Tk 9.26b to ensure food, nutrition security for rural people Publ

« on: August 07, 2018, 07:19:27 AM »

Govt to invest Tk 9.26b to ensure food, nutrition security for rural people
Published:  August 05, 2018 19:44:11 | Updated:  August 05, 2018 19:51:18


The government along with the assistance from the International Fund for Agricultural Development (IFAD) will invest Tk 9.26 billion (Tk 926.50 crore) or US$ 109.85 million to increase income and food and nutrition security for 2,50,000 rural households in the southern region where highest percentage of rural poor reside.

Under the programme, a Smallholder Agricultural Competitiveness Project (SACP) will be implemented in the region for six years and directly supervised by the IFAD.

To this end, an agreement was signed between IFAD President Gilbert F Houngbo and Additional Secretary of the Economic Relations Division Sultana Afroz of the Ministry of Finance in Rome on August 1, officials said in Dhaka on Sunday.

Of the total cost, $64.5 million is loan and $2 million grant from IFAD, reports BSS.

The project will be co-financed by the Government of Bangladesh ($28.65 million), the private sector ($8.1 million), and beneficiaries ($6.6 million).

While Bangladesh is a lower middle-income country, the proportion of people living in extreme poverty in rural areas is still three times higher than in urban areas, it said, adding that women are particularly affected by poverty, as they have fewer opportunities for employment, and rural youth are the most likely to migrate to cities to seek employment.

The main goal of the project is to help smallholder farmers to be more responsive and competitive in producing diverse, high value crops and marketing fresh and processed agricultural products.

“The project proposal now has been sent to the planning commission and it will be approved in the ECNEC meeting,” said ERD Deputy Secretary Bidhan Boral. The Department of Agricultural Extension (DAE) under the Ministry of Agriculture will implement the project, he added.

“Though Bangladesh has made great economic strides, poverty levels in rural areas are not declining as fast as they are in urban ones,” said Omer Zafar, IFAD Country Director for Bangladesh.

“In the project area, 39 per cent of the people are still living below the poverty line. Food security and under nutrition continue to be major concerns. The average rural household in Bangladesh still gains 71 per cent of its calories from rice,” he added.

The project aims to improve incomes and food security by supporting producers in developing high-value agricultural products that correspond to market needs and can contribute to a diversified diet.

Technical training and financial services will be provided and women, youth and disadvantaged households will be specifically targeted.

The project will be implemented in 11 districts covering 30 upazilas (or townships) in the southern region of Bangladesh.

Since 1978, IFAD has financed 33 rural development programmes and projects in Bangladesh, investing $848.2 million or $2.13 billion when co-financing is included. These projects and programmes have benefitted almost 11.3 million rural households.

https://thefinancialexpress.com.bd/economy/govt-to-invest-tk-926b-to-ensure-food-nutrition-security-for-rural-people-1533477078

39

Finance & Accounts / Single biggest FDI in Bangladesh

« on: August 07, 2018, 07:16:47 AM »

Single biggest FDI in Bangladesh
Japan Tobacco snaps up Akij's tobacco business for $1.47 billion
Staff Correspondent
Japan Tobacco Inc., one of the five largest tobacco companies in the world, yesterday acquired Akij Group's tobacco business for $1.47 billion (about Tk 12,430 crore), in what would be the biggest ever single foreign direct investment in Bangladesh.

United Dhaka Tobacco Company Limited, the Akij concern, holds about 20 percent share of Bangladesh's cigarette market, making it the second biggest player after British American Tobacco.

Japan Tobacco would buy shares of Dhaka Tobacco at $1.09 billion and pay $386 million for trademarks and design rights.

For the last three years, Dhaka Tobacco has been acting as a contract manufacturer and distributor of Japan Tobacco's Winston brand and Philip Morris's Marlboro brand.

“This is the biggest FDI in the private sector,” Kazi M Aminul Islam, executive chairman of Bangladesh Investment Development Authority, told The Daily Star.

He went on to term Japan Tobacco's investment plan as a good example of FDI. If the Tokyo-based company's investment is successful, it would add at least $100 million to export receipts, he added.

The purchase is straight out of central casting for Japan Tobacco as it looks to offset shrinking sales in its traditional markets, brought about by tighter smoking regulations and growing awareness of the hazards of tobacco consumption.

In the past 12 months, the company snapped up companies in Russia, Indonesia and the Philippines, all three amongst the top ten tobacco markets in the world.

Bangladesh is the eighth largest cigarette market in the world, with volumes exceeding 86 billion units and growing by about 2 percent year-on year.

“With this investment, we continue to accelerate our expansion in emerging markets that matter,” said Mutsuo Iwai, executive vice-president and president of the Tobacco Business.

The transaction, which is expected to be complete in the third quarter of 2018 following regulatory clearance, will also support the company's sustainable profit growth objectives in the mid- to long-term, he added.

“Bangladesh is one of the fastest growing economies in the world with a pro-business mindset, which is why we are keen to expand our presence in the country,” said Eddy Pirard, president and chief executive of Japan Tobacco International.

The tobacco business of Akij is profitable, has state-of-the-art manufacturing facilities and a strong distribution network and workforce, according to Pirard.

“With our strong track record of integration, we can accelerate operational efficiencies and introduce some of our global flagship brands alongside Akij's well-established portfolio,” he added.

PROGGA, a platform of anti-tobacco campaigners, criticised the deal.

Japan Tobacco will introduce new products to penetrate the market that local companies cannot, said ABM Zubair, executive director of PROGGA.

Industry insiders said the entry of Japan Tobacco is likely to increase competition and compliance in the Tk 33,000 crore annual cigarette market, where British American Tobacco enjoys 60 percent share.

Cigarette is the biggest source of value-added tax for the National Board of Revenue.

Contacted, Sk Bashir Uddin, managing director of Akij Group, declined to comment on the landmark deal and instead referred The Daily Star to the firm that handles Akij's PR.


https://www.thedailystar.net/news/city/japan-tobacco-signs-agreement-with-bangladesh-akij-group-in-asian-business-1616758

40

Policy and acts / Our digital commerce policy in a nutshell

« on: August 07, 2018, 07:13:04 AM »

Our digital commerce policy in a nutshell
 
The much awaited digital commerce policy has been the Cabinet approved a draft of “National Digital Commerce Policy 2018” earlier this month. The policy aims to restore trust in e-commerce websites in Bangladesh by making safer digital transactions. The policy has been quite well accepted by the e-commerce community of Bangladesh.

Following this policy, e-commerce websites should see upgraded terms and conditions to enforce consumer rights where necessary. Mobile payment and digital transactions should get safer within a few days, as banks and mobile financial services are to get more secure. Piracy and hacking is going to be handled by the central commerce cell operated under commerce ministry. The central commerce cell also aims to enforce this policy across e-commerce platforms. This announcement finally got implemented after e-Commerce Association of Bangladesh (e-CAB) has been calling for an e-commerce reformation for quite a few years. This policy came as the government's vision to establish a functioning industry and grow exports, eventually creating a sustainable job market for Bangladeshi youth. The policy also promises to provide credible, reputed vendors from e-commerce websites. Codes of conducts are to be implemented for website designing and consumer rights which the e-commerce websites have to follow through. Copyrights are to be respected and enforced further. Net neutrality and digital rights are going to be enforced from mobile operators end as well. To create awareness on this policy, the government aims to create offline campaigns in different regions across the country to restore consumer faith in the e-commerce industry. A lawful structure is also to be implemented by the ICT ministry to improve consumer satisfaction while buying from e-commerce sites. A digital signature is to be implemented by the e-commerce website on every transaction to strengthen security issues. A centre of excellence will be implemented will be established to further strengthen the e-commerce sector for the future.

https://www.thedailystar.net/bytes/our-digital-commerce-policy-nutshell-1613056

41

Newspaper / Midas Financing launches SME Day

« on: August 07, 2018, 07:05:17 AM »

Midas Financing launches SME Day
It will observe the day on the first Monday of every month
 
Rokia A Rahman, chairman of Midas Financing, and M Hafizuddin Khan, a director, attend the monthly discussion of the financial institution on its premises in Dhaka yesterday. Midas Financing
Star Business Report
Midas Financing yesterday launched SME Day to provide better services to the small and medium enterprises in the country.

The leading financial institution will observe the day on the first Monday of every month at all its 15 branches all over Bangladesh.

The value added financial services provider made the announcement in a monthly discussion on the improvement of small and medium entrepreneurs.

Rokia A Rahman, chairman of Midas Financing, led the discussion on the premises of the publicly listed company in Dhaka where M Hafizuddin Khan, a director of Midas, was also present.

SME business owners and women entrepreneurs joined the event and welcomed the move. At the programme, the SME entrepreneurs shared their stories of success, which they achieved with the help of collateral-free loans from Midas.

SMEs have been receiving special support from Midas for many years, they said.

Midas Financing started its journey in Bangladesh on May 16, 1995.

https://www.thedailystar.net/news/business/midas-financing-launches-sme-day-1616965

42

Seed Investment / The Most Important Points in a VC Term Sheet

« on: June 15, 2018, 05:00:08 PM »

43

How To Raise Money / Raising money for a startup | Stocks and bonds | Finance & Capital Markets | Kha

« on: June 15, 2018, 04:35:22 PM »

44

Finance & Accounts / Financial Planning Tips for Small Business Owners

« on: June 13, 2018, 09:35:29 AM »

Financial Planning Tips for Small Business Owners

Small and mid-size business are the core the of the U.S. economy. Entrepreneurship and creativity have been moving the American economy for centuries. In fact, the U.S. has one of the best grooming environments for startups and small businesses.

Business owners spend several years building up their business. They invest a significant amount of personal time and capital to grow their companies. Many of these entrepreneurs will have their family fortune locked in their business. Focused on their business, often the founders of small firms ignore or delay their personal financial planning until they come close to retirement. So here are several practical steps that business owners can follow to establish a successful financial plan.

Balance Business Goals and Personal Goals
The first and most important step in the personal financial planning process is setting your short and long-term financial goals. In many cases, business goals can interfere and clash with personal financial goals. Business goals to expand into a new market or purchase a new factory can negatively interfere with your personal goals such as saving for retirement or college education for your children. Striking the right balance between your business and personal goals is a key to achieving them. Prioritizing one over the other may hurt your own long-term financial success. (For more, see: 5 Biggest Challenges Facing Your Small Business.)

Explore Different Financing Alternatives
Every new business idea requires capital to start. The success of the venture depends on the owner’s ability to secure financing. Sometimes, the funding comes from personal savings or the sale of property. Other times, the owner needs to look for external funding within his or her social circle or even approach a financial institution. The external financing can be in the form of a loan or equity stake.

Another great way to finance your idea is your customers. In fact, your clients are one of the best and most inexpensive sources of financing. If your customers love your product, they will be willing to give you an advance payment, subscribe to your platform or consider a product/service exchange. (For more, see: The 4 Most Common Reasons a Small Business Fails.)

Control Costs
Even the best idea can fail if it doesn’t generate a profit. In simple numerical terms, company revenue should be higher than expenses. Many ventures do not succeed because the company cannot generate enough revenue to cover all costs. Clearly, the first answer will be to generate more revenue. However, many successful companies are notorious with their focus on cost control. Business owners must stay on top of their expenses. They must track and analyze each cost. Owners should look for operational deficiencies and overlaps, result-based compensation, economies of scale and ways to increase productivity.

Manage Liquidity
Businesses need cash to maintain healthy growth. Not surprisingly, prominent investor Warren Buffet prefers to invest in companies generating significant cash flows. The capacity to produce cash from its operations will determine the company’s ability to pay its employees, creditors and vendors. Building a disciplined system of managing receivables and payables and maintaining a cash buffer for emergencies are key.

Manage Small Business Taxes
Filing and paying taxes is a long and painful process. The current U.S. tax law is very complex. Often, your tax bill depends on your company's legal status. Sole proprietors have different taxation rules from C corporations, for example. Speak to an accountant or tax lawyer to find out what legal status works best for you. To avoid missed opportunities and last minute mistakes, you have to prepare for the filing process in advance. Start early. Keep a clear record of all your expenses. Track all tax filing dates. Remember to pay all federal and state taxes, Social Security, Medicare, local permits and fees. Consider using professional bookkeeping software and working with a CPA.

Establish a Retirement Plan
Having a company retirement plan is an excellent way to save money in the long run. Pension plan contributions could reduce current taxes and boost employees' loyalty. There are few alternatives, such as a 401(k), SEP IRA and SIMPLE IRA. I am a big supporter of 401(k) plans. Although they are a little more expensive to establish and run, they provide the highest contribution allowance over all other options.

The maximum employee contribution to 401(k) plans for 2017 is $18,000. The employer can match up to $36,000 for a total of $54,000. Individuals over 50 can add a catch-up contribution of $6,000 for a total of $60,000 in annual contributions. (For more, see: Choosing a Retirement Plan for Your Small Business.)

Build a Safety Net
Creating a safety net is a critical step to protecting your wealth. Many business owners hold a substantial amount of their assets tied to their personal business. By doing so, they expose themselves to a concentrated risk in one company or industry. Any economic developments that can adversely impact that particular sector can also hurt their personal wealth. The best way to build a strong safety net is asset diversification.

Set Up An Estate Plan
Estate planning is the process of arranging the disposal of your assets after your passing. It can involve your family members, any business partners or other individuals and charitable organizations. Estate planning starts with setting up a family trust and personal will and can also affect financial, tax, medical and business planning. You can use estate planning to eliminate uncertainties over the administration of your assets in probate and to maximize the value of your estate by reducing taxes and other expenses. The ultimate goal of estate planning can be determined by your specific goals and may be as simple or complex as your needs dictate.

Plan for Business Succession
A successful business will have an impact on various parties such as owners, employees, contractors, vendors, clients, landlords and suppliers. Creating a business succession plan will ensure that all parties' interests are met in the event you decide to discontinue your business or pass it to another person. Moreover, a robust plan will address numerous tax and financial issues which will result from the succession. The complexity of the succession plan will depend on the size, industry and legal status of your business. (For more, see: How to Create a Business Succession Plan.)

 

Disclaimer: Past performance does not guarantee future performance. Nothing in this article should be construed as a solicitation or offer, or recommendation, to buy or sell any security. The content of this article is a sole opinion of the author and Babylon Wealth Management. The opinion and information provided are only valid at the time of publishing this article. Investing in these asset classes may not be appropriate for your investment portfolio. If you decide to invest in any of the instruments discussed in the posting, you have to consider your risk tolerance, investment objectives, asset allocation and overall financial situation. Different investors have different financial circumstances, and not all recommendations apply to everybody. Seek advice from your investment advisor before proceeding with any investment decisions. Various sources may provide different figures due to variations in methodology and timing.
https://www.investopedia.com/advisor-network/articles/012617/financial-planning-tips-small-business-owners/

45

Business Incubator / How to Reduce Risks In Small Business

« on: June 13, 2018, 09:33:20 AM »

How to Reduce Risks In Small Business
By Andrew Beattie
 
All businesses come with risks, but small business owners often face a large number of preventable ones. In this article, we’ll look at some basic ways small business owners can reduce their exposure to risk.

Offload Risk Onto Insurers
The most obvious way to address risk is to offload it onto insurers by protecting the business with policies. If there is one type of insurance you absolutely need, it is general liability insurance. General liability can help protect you from lawsuits over employee conduct, product failure and other issues that can arise (For more, see Filling the Gaps In General Liability Insurance.)

A business owner's policy (BOP) can provide much more comprehensive insurance, including liability and business interruption insurance. Of course, the cost of covering those additional risks results in greater overall premiums, but insurance is not an area where being cheap now pays off in the long-term. Small business owners also need to have solid life insurance policies, particularly if their business is illiquid and their family is wholly dependent on its income.

Use Solid Contract Procedures
Legal procedure and advice is another area where the cheapest option may not be the best. A lot of risk can be controlled by having reliable contracting procedures where both parties know exactly what is expected and what is covered under the contract. If you are handling or signing contracts, it is well worth it to have a lawyer review them and explain the scenarios in plainer terms. If you don’t have a lawyer, get one - ideally one who has experience working with small business owners. (For more, see How To Pick The Right Lawyer.)

Take a Systems Approach
Within a small business, controlling risk comes down to systems and record keeping. Taking the time to establish standard operating procedures around critical tasks will allow you to onboard employees more quickly and ensure they receive proper training. Employees introduce a lot of potential risk into a business as they interact with customers or handle products; proper training can help mitigate those risks.

In fact, adding regular risk analysis into all your business systems from sales to hiring to accounting can also help get everyone aware of your business risks and thinking of ways to minimize them. You always want to be asking what the major risks are in an area of your business and how can you address them. (For more, see Identifying and Managing Business Risks.)

For example, an issue many small food businesses face is a product’s shelf life, so over ordering is as much of a risk as being under stocked. One way to address these risks is to have frequently purchase smaller amounts of perishable products and to create a flexible menu that can clear overstock through specials. Lastly, keeping accurate records completes the feedback loop you can use to see whether your attempts to reduce risks is working.

Be Open to Options
The biggest risk most small business owners face is financial. Having cash on hand for several months of operation is universally recognized as a great idea, but for many businesses this is as much of a pipe dream as ensuring you are paying yourself first. Owners tend to get wrapped up in the business financially, for better or for worse. To address this risk, you need to be open to options like finding a partner to bring in capital and share the risk or changing the business structure to one from which you can separate your personal assets. Losing a business is hard, but losing your business and your house is devastating. (For more, see Should You Incorporate Your Business?)

The Bottom Line
It’s actually not a bad time to be a small business owner. For one, the available insurance products have improved, and the package option saves you money over individual policies. Also, there is more awareness about the risks that weak control systems and untrained employees pose. Small business owners have better tools to control risk than ever before, making the whole concept of running your own business a little less daunting.
https://www.investopedia.com/articles/personal-finance/052915/how-reduce-risks-small-business.asp