Posts Tagged ‘Business and Economy’
If you take insurance, you have to pay insurance premiums every month. It looks like money is lost. But if one day something happens to your health, then the cost of your treatment will be covered. If you do not take insurance, it means you are spending less each month. If at any time you are exposed to severe illness (which cost tens or even hundreds of millions of dollars), then your own medical expenses. Well, why should you take insurance? Because the premiums you pay each month is not actually lost money. Rather, the premium is an expense that had to be issued every month. Concepts like this are very common in foreign countries like America and developed countries in Europe. That’s why the population’s health is guaranteed. While we in Indonesia? The majority of people still think of insurance as being “unnecessary”. As a result, so there is a disaster, the family will be desperate for funds. Debt here and there, selling this and that. Things like this will not occur if the following insurance, because insurance companies will pay, not you. Calm the mind, health guaranteed, happier life.
Improved corporate governance. A wide body of research, led by Harvard Business School economist Michael Jensen, has discerned the presence of “agency problems” inside companies that can destroy corporate value. The preeminent agency issue is the conflict of interest between the often passive shareholder owners of a firm (the “principals”) and their hired active management team (who act as “agents” for the principals). The interests between principals and agents often diverge: for instance, principals bear the costs of agents’ making unnecessary acquisitions that dilute firm value but confer more power and prestige upon managers.
The private equity governance model mitigates agency issues through a combination of measures, starting with higher levels of debt in the firm’s capital structure. This makes managers focus on paying down the debt, thereby discouraging them from wasteful spending. Private equity firms also tend to have performance incentive plans linked to profit growth, and up to 20 times the level of performance-based compensation as publicly traded firms.
The boom in private equity has played a critical role in the growth of U.S. productivity and corporate profits over the last quarter century, spurring the creation of jobs and material wealth.
But perhaps most important, private equity control is tantamount to governance by active investors. Public company boards of directors—who are often celebrities, credentialed figureheads, or “rubberstamp” confederates of senior management—represent what can amount to tens of thousands of dispersed owners, few of whom have any incentive to closely monitor the firm. By contrast, private equity-backed boards are smaller, more decisive, more aggressive in firm oversight, and comprised of experts who can truly add value.
The results-oriented focus imposed by a leveraged capital structure, pay-for-performance compensation that aligns owner and manager interests, and superior monitoring and strategic oversight by active investors have all contributed to strong growth in corporate productivity and profits.
The U.S. economy is currently experiencing a long run of impressive growth, driven in part by a dynamic and vibrant private equity sector that is geared to promoting entrepreneurship. But recognizing exactly how private equity influences economic activity is essential to understanding several current political debates.
Prior to the advent of the modern private equity sector, there was an unmet need for long-term patient capital that could be deployed to co-opt growth opportunities or to compel change in companies or industries. Existing financial institutions did not have the risk appetite, requisite knowledge, or capital availability to undertake long-term equity investing. Additionally, the United States has long had a complex regulatory regime for financial institutions that effectively divorced “banking” from “commerce.” Prior to 1980, regulations limiting pension fund investments also limited the formation of a modern private equity sector.
But after 1980, the combination of pension reform, financial deregulation, and shrewd entrepreneurship led to private equity’s rapid expansion, with firms now managing over $2 trillion in leveraged capital (up from about $5 billion in 1980). The boom in private equity has in turn played a critical role in the growth of U.S. productivity and corporate profits over the last quarter century, which has spurred the creation of jobs and material wealth.
Several years ago with my father to take the initiative to open our own business. It’s been several years and can count on this revenue source to help us meet our financial goals. Although I had then a degree in business administration and knowledge of the theoretical steps to take to start the business, the time to decide the most important thing for me was the determination and dedication that has made him a success.
We still have many things to improve, but I want to share things that I consider essential to do so. The business has had its ups and downs, but every day we learn something new and that is important.
Here is a list of tips that everyone, no matter the business, you can take:
Organization
I do not know how to say this easier. The most notable problem I’ve had in my business is that at first we were all excited by the business, but we forget to have a plan of organization. At first you’ll have many heads, have to be an accountant, secretary, messenger, collector, publisher, etc. All areas are important and all need to have a development plan. You have to know how to take the minutes of meetings, regardless of where the money is being spent, who should meet, etc.. For this you need several tools:
- A bank account for business. You can go to any bank and open a business account to your name. In the United States each person is a business.
- A system of how to record the output and input of money (Excel is sufficient.) This will help you know where your money goes and where it goes.
- An agenda to find things to do, who is going to do and the next steps to take. Arrive late or miss a business meeting can cost thousands of dollars.
- A file cabinet to store important documents, but even if your business has to do with confidential information of your customers.
- A tracking system to customers.