Equating Profitability With Cashflows: A Myth in Corporate Financial Performance

The issue of profit and cashflow and their relative importance in business has become an unending discussion in recent boardroom discussions. As some analyst are looking at profit history of business to assess performance, others are looking at the cash movements (ie cashflows). People even get more confuse when a profitable business on one hand is not able to pay its suppliers or expand whiles a non-profitable business (ie loss) continues to stay in business. The income statement and the cashflow statement of every business has the clue to this issue of profitability and cashflow.

Cash flow is the difference between the amount of cash a company receives and pays whereas profitability is the difference between revenues and expenses and every company report on both their cash holdings and profitability as part of its financial reporting. Certain cash flows can not be recorded as revenues or expenses at the time of the transactions, while other cash flows may not be part of the operating activities, and that are not profit related.

Concept of Profitability in Business

The success of a small business depends on its ability to continuously earn profits. Profit basically equals a company's revenues minus expenses and is critical for businesses because it determines whether a company can secure external financing, attract more investors or grow its operations. A business owner must understand the importance of profitability in business management and develop strategies that give his company the best chance at remaining profitable as that is its main goal for existence among other goals.

Relevance of Profitability in Business

Profits stimulate investment and innovation and as a business undertakes more investment, it leads to generation of more employment. With generation of employment income, more demand for goods in the market will be created.

Profit is considered necessary for business survival and growth and a business that does not make enough profit is not likely to survive in a growing competitive environment because it enables the business to grow, motivate employee, partnerships investors etc.

Profit is a return on investment and every firm invest money with the expectation of higher returns on their investment. Just likeholders expect higher returns in the form of dispute so do financial institutions expect better rate of interest on the loan given to the business enterprise.

Profit is used to test the efficiency of a business and the success or otherwise of the business can be justified by the amount of profit earning capacity.

Profit serves as buffer to meet unexpected expenses and as a business is exposed to many risk and uncertainties including changing market demands and conditions etc., profit is used to meet such unfavorable business changes.

Retained profit serves as a form of internal financing and can be used for increasing the volume of business through expansion and diversification. Any further surge is re-invested in the business for further development.

The Concept of Cashflow

The old-age saying, "cash is king" which is usually used to explain the failure of both businesses and consumer households remains relevant in modern business because without proper amount of cash on hand, entities can run into major trouble, and even be forced into bankruptcy. Cash inflow is the lifeblood of every business and businesses need cash for various reasons including investing in new infrastructure and dealing with unexpected expenses. Moreover, a key factor in a business's potential for long-term success is cashflow and as such a company may have all the revenue in the world, but without the ability to generate cash, it can easily fail. Without cash a business will not run, resulting in employees becoming cranky and suppliers ceasing to supply materials even though the business may be very profitable. Sources of cashflow include receipts from customers, additions to capital, payments to suppliers, etc.

Relevance of Cashflow in Business

For a company to grow, it will often need to make capital expenditure investments in areas such as factories, machinery, or technology etc which are usually one-time cost and require significant funds, but without cash on hand, a business may not be able to make these necessary investments and, as a result, may never be able to experience company growth. Even where loans are used, the loan agreement will require a significant down payment or periodic interest payment which will in turn require that the company have access to cash.

Businesses can undertake mergers or acquisition as an expansion strategy either within their niche or to branch out into new areas but without the necessary cash, it would never be able to take that opportunity to buy a valuable company at a reasonable price. Acquisitions like these offer growth potential for many businesses.

Two key benefits of holding shares is dividends and share repurchases. Dividends puts cash in the pocket of shareholders whiles share repurchase is a management way of expressing confidence in the business growth potential via share valuation. However, without cash though disputes nor share repurchases would be possible for a public company.

Every company experiences economic downturns at some period in operation which could affect its sales and with cash, the company will be more flexible and able to survive the downturn but without readily available cash, it may be forced to wind up, downsize its staff or even be declared bankrupt.

Businesses like individuals also face vacancies for expenses that require immediate payment like legal fees and unexpected costs associated with natural occurrences and as most of these are not budgeted for, it means businesses must have access to the necessary cash to prepare for such emergencies, and without cash, the business may fall flat.

Businesses are expected to minimize cost and one way to do this is to reduce a lot of online transactions processing which comes with a lot of excessive fees and to use cash instead where appropriate. By paying cash, a business can reduce its online fees and extremely cut transaction costs to the minimum with surplus cash for other productive activities.

Readily available cash helps businesses expand in the absence of loans. Many businesses have difficulty accessing loans for expansion but if it has cash available, it can position itself to take advantage of opportunities to expand and make relevant decisions.

Cash is essential for paying bills faster to avoid unnecessary penalties because paying creditors with forms other than cash can take longer to process, leading to unnecessary late fees and it makes more sense that paying in cash is the preferred method.

Are there any differences between Profitability and Cashflow? YES!

The differences between these business concepts is in recording of Non-Cash Revenue, Non-Cash Expense, Financing & Investing transactions. Companies may see increased profitability from non-cash revenues, but such an increase in profitability will have no impact on company cash holdings because companies record revenues when earned using the accrual method of accounting, despite no cash received and when cash is later collected for previously recorded revenues, increases company cash holdings but will have no impact on the profitabilityability again. Non-cash revenue incudes accrued income, credit sales, gains and profit on disposals etc. Also, companies may see reduced profitability because of non-cash expenses, which will have no impact on company cash holdings. Companies record expenses when incurred using the accrual method of accounting, despite no cash paid and when cash payments are made later for previously recorded expenses, it decreases the company cash holdings without affecting profitability.

Other differences are:

• Money invested in a business, or borrowed by a business, increases cash BUT does not increase profit
• Capital expenditures, such as buying a new machine, decreases cash BUT does not decrease profit
• Profit accounts for overheads on accrual and prepayment basis whiles cashflows accounts for overheads when cash is paid
• Cashflows reflect the details of incoming and outgoing flows of cash without using estimates of allocations and provisions like depreciation, bad debts etc. BUT profit is associated with a lot of such allocations and provisions

Conclusion

When you imagine a new business, you think of what it would cost to make the product, what you could sell it for, and what the profits per unit might be because we are trained to think of business as sales minus costs and expenses, which is profit but cash is equally critical yet people always think in profits instead of cash and interestingly we do not spend the profits in a business, we spend cash instead.

Desist from thinking that making profit increases cash the same amount because a business's cash flow can be significantly higher than bottom-line profit, or consider lower and know that cash flow can be negative when you earn a loss or positive when you have a loss because there's no natural correlation between profit and cash flow. It's that prudent for businesses to remember that cash pays the day-to-day expenses, not profit and is important for the business always. Profit becomes more important for the long-term success of the business.

Tips for Using Voice Dictation to Blog on the New iPad

Would not it be great if blogging were as simple as sitting down with a friend to share a story, your thoughts, or a point of view? Oh, to be freed from the computer keyboard and writer's block - to be able to simply say what is on your mind without freezing up in front of the computer screen without any idea what to write? Well, now it can be that simple.

Whether you are an aspiring writer or a professional who wants to share your knowledge and opinions with the world - whether it is writing about food, pets, cars, reporting the news, or simply keeping an online journal - blogging just got easier with the help of Apple's new iPad, featuring voice dictation. When combined with the blogging app Blogsy, the iPad becomes the ultimate tool for bloggers. I am going to explain to you how easy it is to use. Before you begin blogging, you will need to establish a site for your blog. There are plenty of free options on the web like Blogger, WordPress, Moveable Type, and Drupal, all of which only take a few minutes to set up and even offer themes to make your blog unique. then you can get started.

Step 1: Setting up Blogsy

The first thing you have to do is set up Blogsy with your blogging account. Open Blogsy and click on the gear icon in the lower right corner. This will bring up the Setting tab, where you will find several options like Service Settings, General Settings, How-To Videos, FAQs, and few others. Tap on Service Settings and you will be presented with a list of blogging platforms. Select the platform you have chosen on which to blog, enter your account details, and tap Sign In. Then head back out to the main input screen and get ready to starting blogging!

Step 2: Writing your post with voice dictation

Now that you have ready to write, let's go over the Blogsy interface. Across the top of your screen, you will see a toolbar that features all of your text editing tools. Positioned vertically on the right are options from which you can pull in media (pictures and videos). The majority of your screen is made up of the text or input box, which is broken into two parts, the title and the body.

Now, let's get to the part you have been waiting for - blogging with your voice. It is as easy as pushing a button.

Title:

A blog post's title is very important. The title not only joins readers, but it is also what Google's web crawlers will find when cataloging your site's data. Make it short, catchy, and to the point. Tap on the grayed-out word, "Untitled." A cursor will appear, and the on-screen keyboard will pop up. To the left of the space bar is a microphone; This is the button to activate / deactivate the voice dictation function. When you are ready to begin, tap the button, wait for the chime, speak your title, then tap the button again. Within a second or two, your words should appear exactly as spoken. A word of advice: When you are using voice dictation, remember that the microphone is on the top of the device (look for the hole directly above the camera on the aluminum side). It helps to lean the iPad toward you when speaking. It is also very important to speak slowly and enunciate your words. Try not to whisper or use slang, as the iPad will probably get it wrong, and you will just end up wasting time with edits.

Body:

Now tap directly below the title in the body box so that you can begin to write your post in the same manner. While the dictation feature is powerful, it is not without limitations. It would be nice to talk continuously until you have finished your thought, but you risk overloading the iPad and losing some of what you said. Pace your thoughts, speaking one or two sentences at a time.

And that's it! Simply continue to follow this method of speaking slowly and clearly, taking breaks between thoughts, and you'll have a complete blog post in far less time than it would have taken to type.

Step 3: Adding images or videos to your post

Images within a blog post help the reader visualize your thought, so they are important to include. Blogsy makes adding media extremely easy with its ability to drag and drop images and videos from multiple sources, including YouTube, Flickr, Google Images, the Internet, and your own photo files, as well as images stored in your WordPress image library.

Business Survival Tips in a Bad Economy

The economy runs in a cyclical pattern. Most business people know this and, hopefully, plan for it. Whether the cycle is based on the calendar, the changing seasons, or national and world events, there are good business times and instances when things seem bad or even dire. It is easy to say "Keep the emotion out of decision making." It is far more difficult to make some choices without a sense of worry and fear. Anyone who has bills to pay or a family to support has that nagging voice of apprehension in the back of his or her mind. There are thousands of successful people (including this writer) who have been near or at rock bottom. They made the choice to take positive action to get out of the pit and back into the light of achievement. Again, this might be easier said than done.

So ... anyone in a difficult business situation has three choices:

1. Find new ways to keep your business / career going
2. Find a new career
3. Do nothing and hope for the best

The third choice is reaction and not action, since you will 'ride the wave' of whatever comes to pass.

The second choice, while difficult to decide, may be the only option for your situation. Discuss this decision with the people in your life that matter the most to you, especially if you have a family. They need to know and understand what might happen.

The first choice will take some effort and determination. If you're willing to dedicate energy to your success, the benefits will be timeless. Below are a few suggestions that might assist you with weathering a bad economic storm. Keep in mind not every idea will work for every person or organization.

Improve Customer Service - No matter your industry, your customers are probably feeling the same economic slow down as you. Demonstrate to them the reason their money is best spent with you and your company. This does not necessarily mean offering a discount or giving another sales pitch, even though there is nothing wrong with doing that to generate sales. Simply talk to them; find out how their business is going. Show genuine interest in their prosperity. Hospitality professionals can build a memorable experience instead of simple order taking and delivering food. The objective is to "wow" your customer more than ever ... and certainly more than your competitors.

Find New Low Cost / High Impact Tactics - Maybe you can find a better component that reduces costs while maintaining quality. There might be a step in your operations that can be modified to improve margins. A little research might lead to surprising results. Be careful when doing this so as not to put someone out of work because the next person trimmed from the payroll could be you. Another operational aspect to modify would be advertising. Usually one of the first budgets to be cut, your marketing expenses will always be an important part of your operations. Find the promotional campaign thatave you the best results over the past three years and implement it again. Do some research to see if other advertising methods or different audience that would give your business an immediate impact. What about giving your sales team a larger prospect base, such as expanding their geographic area? Increasing quotas probably is not the best idea. It is difficult enough to get a completed sale in this slow economy. They are already concerned if there will be food with their next meal. No need to put additional stress on them, which customers and prospects will sense. That is, unless you want your sales people to leave or your customers to lose faith in the stability of your company.

Get Cross Trained - Learn how to work in other positions at your company. When the unfortunate layoffs begin, your value will increase because you know more than one job. There might already be a gap due to down sizing and it is an opportunity for you to be proactive by helping to fill the need. Before cross training begins, make sure this other position will be necessary for a long time and not slated to be phased-out. Business owners will find this a good time to get 'back in the trenches' and relearn various aspects of the operation. There might be instances where, unfortunately, it will be more economic for you to work a position than pay someone.

Take a Class - There is always something new to learn whether it is about your chosen profession, how to improve your lifestyle or some topic that is completely new to you. It would be a good idea to get some education about industries that compliment company's operations. Maybe, when you started reading this article, you thought about selecting Option 2 - find a new career. Would not your future have more options by learning some new skills? Consider any education as a way to get where you want to be. There are libraries, community groups and online sources of free or low-cost education. Find what is available for you.

Discover New Networking Groups - "It's not what you know, but who you know." Sound familiar? One of the most important questions to keep in mind when meeting someone for the first time is not "What can you do for me?" but "What can I do for you?" By focusing on the other person, who they are and what they need, you will have a better chance of being remembered as a positive and helpful professional. Expanding your circle of influence is not completely reciprocal; however new opportunities will usually present themselves when you least expect it. Of course, you will need to foster this new relationship over time.

Business owners, presidents and VPs may look to their managers, managers and employees for ideas. You already know the people in your organization who show initiative and understand their jobs. By getting more people involved, they will have a sense of commitment from you and some reassurance. They see the economic signs the same as you and probably have the same concerns about the stability of their job. For managers and employees, ask your supervisor or company's owner if they are willing to listen to your ideas to keep the company prosperous. Any sincere offers will be perceived as your commitment to the company's success.

You might be thinking: "What happens if I chose Option 1 and nothing happens or things get worse?" You can try again with a new plan; take another look at finding a new career; or just start jumping for the best. Obviously, that question can be asked if any of the choices were selected. It is for you to determine the best path to follow to get the most from your situation.

Also consider having "Me Time" or "Family Time" at least once a week. This will give you and everyone around you the chance to relax and reset. You will not be the only one who will get burned-out from the stress of working all the time or worried about the future. Remember there are people who care about your well being. Talk to your close friends, your spouse, your significant other and even your children. Communication will bring comfort to everyone. Draw strength from your family and close friends for encouragement and moral support during the challenging times. This will help you to stay focused on whichever path you choose to take.

Finally, a job does not dictate your worth as a person. A job is only a resource to achieve a desired lifestyle. Your ethics and personal values ​​are the characteristics that make you important and distinct ... to yourself, your family and your friends. Because, in the grand scheme of the universe, it is not what job title you held that will be important, it is the number of people whose lives were enriched by knowing the real you.

Wishing you and your good health and prosperity!

Life Insurance: Back to Basics

Life Insurance: A Slice of History

The modern insurance contracts that we have today such as life insurance, originated from the practice of merchants in the 14th century. It has also been acknowledged that different strains of security arrangements have already been in place since time immemorial and somehow, they are akin to insurance contracts in its embryonic form.

The phenomenal growth of life insurance from almost nothing a hundred years ago to its present gigantic proportion is not of the outstanding marvels of present-day business life. Essentially, life insurance became one of the felt necessities of human kind due to the unrelenting demand for economic security, the growing need for social stability, and the clamor for protection against the hazards of cruel-crippling calamities and sudden economic shocks. Insurance is no longer a rich man's monopoly. Gone are the days when only the social elite are afforded its protection because in this modern era, insurance contracts are riddled with the assured hopes of many families of modest means. It is woven, as it were, into the very nook and cranny of national economy. It touches upon the holiest and most sacred ties in the life of man. The love of parents. The love of wives. The love of children. And even the love of business.

Life Insurance as Financial Protection

A life insurance policy pays out an agreed amount generally referred to as the sum assured under certain circumstances. The sum assured in a life insurance policy is intended to answer for your financial needs as well as your dependents in the event of your death or disability. Hence, life insurance offers financial coverage or protection against these risks.

Life Insurance: General Concepts

Insurance is a risk-spreading device. Basically, the insurer or the insurance company pools the premiums paid by all of its clients. Theoretically speaking, the pool of premiums answers for the losses of each insured.

Life insurance is a contract whereby one party insures a person against loss by the death of another. An insurance on life is a contract by which the insurer (the insurance company) for a stipulated sum, engages to pay a certain amount of money if another dies within the time limited by the policy. The payment of the insurance money hinges upon the loss of life and in its broader sense, life insurance includes accident insurance, since life is insured under either contract.

Therefore, the life insurance policy contract is between the policy holder (the assured) and the life insurance company (the insurer). In return for this protection or coverage, the policy holder pays a premium for an agreed period of time, dependent upon the type of policy purchased.

In the same vein, it is important to note that life insurance is a valued policy. This means that it is not a contract of indemnity. The interest of the person insured in hi or another person's life is generally not susceptible of an exact pecuniary measurement. You simply cannot put a price tag on a person's life. Thus, the measure of indemnity is whatever is fixed in the policy. However, the interest of a person insured becomes susceptible of exact pecuniary measurement if it is a case involving a creditor who insures the life of a debtor. In this particular scenario, the interest of the insured creditor is measurable because it is based on the value of the indebtedness.

Common Life Insurance Policies

Generally, life insurance policies are often marketed to cater to retirement planning, savings and investment purposes apart from the ones mentioned above. For instance, an annuity can very well provide an income during your retirement years.

Whole life and endowment participating policies or investment linked plans (ILPs) in life insurance policies bundle together a savings and investment aspect along with insurance protection. Hence, for the same amount of insurance coverage, the premiums will cost you more than purchasing a pure insurance product like term insurance.

The upside of these bundled products is that they tend to build up cash over time and they are eventually paid out once the policy matures. Thus, if your death benefit is coupled with cash values, the latter is paid out once the insured dies. With term insurance however, no cash value build up can be had.

The common practice in most countries is the marketing of bundled products as savings products. This is one unique facet of modern insurance practice whereby part of the premiums paid by the assured is invested to build up cash values. The drawback of this practice though is the premiums invested become subjected to investment risks and unlike savings deposits, the guaranteed cash value may be less than the total amount of premiums paid.

Essentially, as a future policy holder, you need to have a thorough assessment of your needs and goals. It is only after this step where you can carefully choose the life insurance product that best suits your needs and goals. If your target is to protect your family's future, ensure that the product you have chosen meets your protection needs first.

Real World Application

It is imperative to make the most out of your money. Splitting your life insurance on multiple policies can save you more money. If you die while your kids are 3 & 5, you will need a lot more life insurance protection than if your kids are 35 & 40. Let's say your kids are 3 & 5 now and if you die, they will need at least $2,000,000 to live, to go to college, etc. Instead of getting $2,000,000 in permanent life insurance, which will be outrageously expensive, just go for term life insurance: $100,000 for permanent life insurance, $1,000,000 for a 10-year term insurance, $500,000 for a 20-year term insurance, and $400,000 of 30 years term. Now this is very practical as it covers all that's necessary. If you die and the kids are 13 & 15 or younger, they will get $2M; if the age is between 13-23, they get $1M; if between 23-33, they get $500,000; if after that, they still get $100,000 for final expenses and funeral costs. This is perfect for insurance needs that changes over time because as the children grow, your financial responsibility also lessens. As the 10, 20, and 30 years term expires, payment of premiums also expires thus you can choose to use that money to invest in stocks and take risks with it.

In a world run by the dictates of money, everyone wants financial freedom. Who doesn't? But we all NEED financial SECURITY. Most people lose sight of this important facet of financial literacy. They invest everything and risk everything to make more and yet they end up losing most of it, if not all- this is a fatal formula. The best approach is to take a portion of your money and invest in financial security and then take the rest of it and invest in financial freedom.

Ultimately, your financial plan is constantly evolving because you are constantly evolving. You can't set a plan and then forget it. You need to keep an open eye on your money to make sure it is working hard because that money needs to feed you for the next 20-30+ years that you will be in retirement. You have to know how to feed your money now so that it can feed you later.

New Business, New Life

Nicholas Feldman owns Dare To Dream Attendant Services in San Francisco, California where he lives with his fiancé and his companion dog Elliot. Nick has cerebral palsy and drives a powered wheelchair with his chin. Nick also has twenty-four hour attendant care.

About a year ago, I started my own business doing homecare in San Francisco. I had decided to do this after working in the nonprofit sector for over nine years and seeing an ever-growing need for homecare.

Starting a business is a very time-consuming process. You must spend hours researching the market and then target the audience that you want to serve. You must market your business, which really means marketing yourself because you get up everyday and you realize that you are your own boss. The business plan is the most important document for a new business owner to follow. You must make critical decisions and plan for whatever may happen next. You are forced to direct and grow the company that is your baby. You are a reader of your company's fortunes and you must take control of what information you have access to. You must understand every angle both social and business. You must be "quick as a whip" and "a jack of all trades." When the internet stops working or the IRS needs a special number, you have to stay organized. You realize that you are the one that must motivate to make money and to thrive even when you are up against a wall. You chose your dream career and you got exactly what you chose.

It takes a lot of discipline to wake up every morning at seven, go down to the office and set into motion the agenda for the overall day, while keeping the overview of the entire company in the back of your mind. It is a balance between the business world and your personal life and making room for both. When people ask me, "Why do you do it?" I think they are referring to the thirteen hour days and the phone calls that never end. I say, "I love what I'm doing and I would not want to do anything else."

Programmer Jobs And The Financial Services Sector

Programs throughout the United Kingdom have a variety of industries in which they can work. IT consultancies and firms that contract professionals to corporations can be lucrative and dynamic. Defense, aerospace, and engineering firms need programmers who are interested in learning about their specific needs and developing IT solutions appropriate for these needs. However, one of the best areas of entry into the job market for a young programmer is in the financial service sector. Programmers need to understand what prospective jobs in financial services require before taking the leap into this lucrative industry.

One aspect of financial service programming jobs in the United Kingdom is creating proprietary systems. Banks and financial advising firms need to have a variety of programs to keep track of funds, account information, and other data. While some banks contract out these services to outside IT firms, many have hired programmers to develop in-house systems. Programmers who are hired to create these systems often have to complete their technical work and then provide training and the new system to employees. In this way, programming jobs in the financial service sector can be interesting and engaging for an IT professional.

Perhaps the largest aspect of the programming job in a financial services firm is providing updates and corrections to IT systems. Programmers often monitor transactions in real time to determine if there are any glitches or bugs that need to be fixed in the system. As well, programmers will typically run a variety of diagnostic tests and evaluations on a system daily to determine if any problems develop as data accumulates in the office network. Programming jobs in banks and financial advising firms are often about patience, reviewing systems, and keeping an eye out for the smallest of problems.

Finally, programming jobs in the financial services sector often require efforts at outreach to non-IT professionals. Bank personnel, financial advisors, and stock traders alike are more familiar with their specific job responsibilities than IT issues. As such, programmers who are fixing problems or installing new updates need to keep professionals updated on what is going on. Programs often need to send out e-mails or go around to individual workers affected, depending on the size of the office. In these communications, a programmer has to explain why the system is down or what they are doing that is causing a slowdown in the network. However, programmers should also explain the consequences of updates to help keep their colleges in the loop.

The Home Based Business Explosion Is Upon Us!

INTRODUCTION

Perhaps I should start by asking the question "What is a Home Based Business? This is any business operated from the comfort of the residential home of the owner.

The next question is who is a Home Based Business owner? This reflects to an Entrepreneur who decides to run his business from the comfort of his home.

I decided to clarify these terms because there is a huge difference between a Home Based Business owner and a Home worker who may be working with a government / private organization but decides to be working from home once or twice during the week.

Evolution of Home based Business

Many businesses operated from home usually start as a Micro or Small Enterprise. Some ever metamorphose into Medium Scale Enterprise and others ever grow into quite large companies.

The desire by Entrepreneurs to start operating businesses from home actually started in the 1980s. During this period, a lot of things combined to precipitate this massive desire by people to own Home based businesses.

In the main, the combination of many factors like socio-economic change, improved technology and new management thinking resolved in the loss of other permanent permanent employment and this encouraged people to attempt to revalidate their freedom by opting to set up a business at home.

The advent of new management thinking and theories like downsizing to make an organization Lean and more agile and efficient created flaws in the mind of the average worker

So mass lay-offs helped create the right environment for some workers to go it alone and set up a Home based business.

The period of late 1990 to 2010 can be appropriately described as the period of massive explosion in the establishment of businesses at home. The use of Computer, Internet and Mobile Technology helped in the growth of this idea.

I strongly believe the idea of ​​setting up business at home will continue to be positive and will remain so for a long time.

The continued upsurge in the desire of people to own businesses has attracted the attention of Universities and other higher institutions. They have responded by introducing different courses and programs on Entrepreneurial studies to cater for these needs.

Unlike earlier belief that businesses run from home are not well managed and do not make good money, the present situation is that many entrepreneurs motivated to set up business at home now have college degrees including a lot of high level professionals with business exposure.

The entrepreneurial spirit is innate in all of us and we only need to be adequately motivated to take the necessary action.

It's really an exciting world out there.

THE HOME BASED BUSINESS EXPLOSION

As stated earlier, although the crave for running businesses from home started way back in the 1980s, what can be termed the explosion of this way of doing business was between the late 1990s and the first decade of the new millennium. (2010+)

This coincided with the time when the setting up of a Home based business became a Fad. According to Mr. Lewis of the National Association of Home Based Businesses, Home based business in the United States grew from about 6 million in 1984 to 23 million by 2007.

With the help of modern technology like computers, mobile phones, printers and the huge power of the internet, more work is being done actually than ever before and more global businesses are routinely being run from home.

According to the 2012 GEM report, 69 percent of American entrepreneurs start their business at home from either a spare room in the house, the dining table or from the garage. The report further revealed that more than 50 percent of entrepreneurs continue to operate from home even after the business has taken off successfully and stabilized.

Again according to Mr. Lewis of the National Association of Home Based Businesses, his own companies do training in 20 countries, import eyeglass frames from China and also develop condominiums.

Mr. Nuyten of the Home Based Business Statistics in America cited the following statistics as at 2012:

38 million Businesses were operating from residential homes in America

A new business is started from home every 12 seconds in the United States

The Home Based Business sector in the United States earned Four Hundred and Twenty Seven billion dollars.

It revealed that 70 percent of Americans would like to be self-employed.

Entrepreneurship has become entrenched in the psyche of the average person. The Baylor University study of 2005 revealed then that more than 5 million jobs had been lost in Fortune 500 companies since 1980 while 34 million were created in small businesses.

The United States Census Bureau data of October 2012, also disclosed that the number of businesses being operated from home have been on the rise since 1999.

The United Kingdom Experience

The continued growth in the Home based business sector appears to be a global phenomenon as the report from the United Kingdom will show briefly.

The United Kingdom Department of Business, Innovation and Skills released a report titled "Backing for Home Business" which revealed that 2.9 million home based businesses in the United Kingdom contributed 300 billion pounds sterling to the UK economy. The report also stated that 70 percent of all new businesses in the United Kingdom started from home.

According to Home Business report compiled by Enterprise Nation, 1,400 new businesses are starting from home each week.

This report also confirmed that out of a total of 4.5 million small and medium enterprises, 2.1 million are Home based businesses.

Factors contributing to the growth of Home Based Businesses

There are many factors motivating people to set up Home based businesses such as:

• Losing one's job

Being laid off in a time of economic downturn could be very devastating. With difficulty in getting new job offers, the next best thing would be to start a home based business.

• Flexible lifestyle

You are your own Boss. Literally, you can come and go as you please. You maintain better work / family balance. There are no set opening and closing times. You go for lunch and vacation when you feel like

• Reduction in Stress level

The daily commuting, especially with the present heavy fuel costs is avoided. Also those train / bus rides to and from work with all sorts of characters is avoided.

• No corporate office politics

You are not thinking of how to always please the boss and climb the corporate ladder. You do not have to engage with difficult collections. Best of all, there are no dress codes.

• Cheaper start up and running costs

It's cheaper to set up a Home based business. A serious entrepreneur can get started with just $ 5,000. The main requirements could just be a computer, mobile phone, printer and a good internet connection. No rent of physical store space.

• Secondary Income

Some entrepreneurs set up business at home to bring in extra income to support a day job. Some people start the business as a part time hobby. Sometimes the business may become very successful and the entrepreneur will now take the decision to resign from the day job.

• Be your own boss

You are your own boss. You have the freedom to do things the way you want. There is nobody breathing down your neck reminding you of targets.

• Job dissatisfaction

An otherwise loyal employee may become unhappy with the company for lack of promotion and motivation. The next thought is to set up a Home based business.

• Opportunity to achieve Self actualization

Having your own business gives you the opportunity to make as much money as you desire. This course depends on how much money you want to make and the amount of time and effort you decide to invest in the business.

Advantages of running a business from home

The desire to get out of the rat race, avoid the daily grind coupled with the power of modern technology make telecommuting more productive.

Together with some of the factors already mentioned above, listed below are more advantages:

• Tax advantages

You can deduct some of your expenses as business expenses. These could be utility bills, insurance, mortgage and property tax.

• Opportunities for Professional improvement

It is safe to assume that with the day to day running of your business, you will develop more business management skills.

• Multiple streams of Income

With more time to yourself and the freedom to follow your lead, you can decide to explore other areas of interest and create multiple streams of income.

Disadvantages of running a business from home.

In spite of the almost glamorous attraction of Entrepreneurship, there are some disadvantages which must be effectively managed in order to improve the chances of success.

• Irregular Income

For some one that had been used to regular pay checks, having to go through some weeks without income could be a huge challenge.

• Lack of adequate space

This could arrise where work sometimes spills into the home space

• Awareness of Family and Friends

The ignorance of family and friends could become a distraction if not properly managed.

• Lack of Fringe benefits

Fringe benefits like health and dental insurance and paid vacations which were hitherto being enjoyed in paid employment are no longer available.

• Friction with neighbors

The type of business you are involved in could create friction with neighbors due to noise pollution and lack of packing space

• Health Issues

Staying glued to the computer screen and in a small space may affect health and fitness. So try and create time for exercise and recreation.

CONCLUSION

So as the French would say Voila! There you are! The idea of ​​starting a business at home has become engraved in the mind of people. Every day, people are starting thousands of businesses in their residences all over the world.

Although there are disadvantages in running a business from home, the advantages far outweigh the disadvantages.

Some industry watchers believe that crave for setting up businesses at home is saying and the general trend could be heading downwards.

However, I personally believe that the trend can only continue northwards. Why? Because I see all the indicators still pointing positive. The factors that motivate people to set up Home based business are still very much around. There are still massive lay- offs going on in many companies and workers are still feeling short changed by employers.

To crown it all, the technological tools like Computers, Mobile Phones, Printers and the Internet which assist Home Based Business owners to work smarter and achieve more with less effort are still evolving.

Therefore I'm of the view that the trend of setting up businesses at home is still on the upward swing.

So, how about you? What do you think? Is the trend moving up or going down.

Let's have your thoughts.