09. August 2013 · Comments Off · Categories: Strategic Business Finance · Tags: ,

In order for a company to determine the point of production in which it can maximize profit, it must first identify it’s costs.

There are many different types of costs that are associated with operating a business. Some are incurred only once, some are incurred everyday and some costs are associated with the long-term success of the business itself. Organizations attempt to identify all of their costs in order to also identify where they can save money by lowering their costs. Running an efficient business means that you are spending only what is necessary in order to receive a greater return.

Maximize Profit

Fixed costs takes into account money that the company has to pay no matter what. Even if they don’t produce anything and aren’t making any kind of profit, these costs are incurred. They are associated with the actual existence of the company themselves such as rent for the space it is using or labor costs for the employees who are working there. There is no way to control these costs. Variable costs on the other hand are costs that change with the amount of products that companies are producing. This includes the amount of electricity or materials that can fluctuate with a greater output or decrease with less output. Variable costs can be monitored and controlled in the short-term by changing the level of production or achieving higher means of efficiency. Total cost is the sum of total fixed costs and total variable costs.

Average fixed costs (AFC) is found by dividing the total fixed costs by the quantity of goods produced. Average fixed costs decline as the quantity being produced increases and helps a company to determine how much of their fixed costs are incurred per unit produced. The total fixed costs are spread across a large quantity of output. Average variable costs (AVC) area found by dividing the total variable cost by the quantity of goods produced. The average total cost (ATC) is the sum of the AVC and AFC. It has been found that production isn’t efficient or cost-effective at lower quantities of output. Visit Agency Fusion Utah today for additional financial tips.

Marginal cost is the additional potential cost of producing exactly one more product. It can be controlled by choosing whether or not to produce that additional unit. It is calculated by dividing the change in total cost by the change in the amount produced. It helps an organization identify where it can save money. A profit-maximizing company is one where the marginal cost equals the marginal revenue.


08. August 2013 · Comments Off · Categories: Financial Restructuring · Tags: , ,

Running a company is not only time-consuming, it is costly as well.

There are a variety of different expenses that go into operating a business and creating products.

Any and all of the resources that a company utilizes in order to operate their business in turn come with opportunity costs and economic costs. Opportunity cost can be thought of as the ‘risk factor’. It outlines the potential gain that a company misses out on by choosing one alternative over another. Economic cost is the money that a business has to come up with in order to secure a resource. Economic costs are calculated by analyzing the explicit and implicit costs. Explicit costs are external payments to secure resources that are needed to produce a product. Explicit costs are an example of opportunity costs because it involves spending money that could have been used to purchase an alternative. Implicit costs involve a company using resources that it already owns in order to produce an offering instead of selling those assets to another company for profit. Learn more about Agency Fusion Salt Lake City Utah here.

Business Costs

There are also fixed costs and variable costs that exist within production. Fixed costs consist of money that a company has to spend regardless of changes in the quantity of products they choose to produce. They are costs that are incurred simply because the organization exists and have to be paid even if the company doesn’t receive any profit from production. This includes utilities such as electricity and rent required for the building or property that it operates on. Variable costs consist of costs that change with the level of production. The amount of materials needed is an example of a cost that could be significantly more if production is increased. Total cost is then the sum of all fixed and variable costs at each possible level of production output.


02. May 2013 · Comments Off · Categories: Financial Restructuring

Investing in commercial real estate is not for the faint hearted. One thing the financial crisis has taught us is that property values can go down as well as up. Most commercial property funds around the world are currently frozen, meaning investors may not withdraw their investment.

Originally, these funds were frozen for a limited period of time, but as the crisis deepens the freezes have been extended. Most commercial real estate has seen a substantial fall in value – at least a 40% fall over the last year, and this will mean inevitable losses as most commercial mortgages are short lived – 5 years. As they need refinancing over this year and next, many investors are going to discover that banks are not willing to refinance a property that is now worth substantially less than when the original mortgage was taken out.

This means either defaulting on the loan – or coming up with the shortfall in cash. Either way, the commercial mortgage defaults have the potential to far outweigh the residential ones.

As the world moves into a deeper recession (the US voodoo banking stress tests notwithstanding) commercial property will continue to see falling demand and values. No one expected the banks to fail the stress tests, although I personally fail to see why a solvent bank would need to raise more capital.

In Las Vegas for example, commercial property development has come to a complete standstill and the amount of foreclosed property is quite staggering. Just take a look at the amount of foreclosures for sale here: http://bankproperties.com There is already a 28 percent vacancy rate, so most developers – if they are still in business – are taking the view that it is better to cut their losses and walk away from a development rather than to throw more money into what is unlikely to be sold or let out in the foreseeable future.

But, one man’s loss is another man’s gain. For those with the wherewithal and patience to wait for an upswing, there may well be bargains to be had in the commercial real estate sector. Las Vegas may be one of the worst hit markets currently, with Casinos going broke left and right, but it could offer the best bargains also.

Realistically, one must take a gamble here – will the upswing take place in time to make an investment in commercial property worthwhile? Some markets will recover quicker than others. Some markets may never recover in our lifetime. It is estimated that there is 100 million square feet of empty commercial space in Beijing, China. That would be a longshot bet to me. Las Vegas is another gamble. There is a huge amount of investment property for sale in Las Vegas, and other parts of the US. An upswing will, no doubt happen, but in some areas, I suspect it will be too little, too late for a lot of developments. 

Here in New York Credit Unions  are becoming much more popular. In the past, in the popular mind, credit unions were only associated with labor unions, company owned towns and small town politics. But, Credit Unions have done a lot of growing up in the past half century and have become a very competitive place to bring your business.

Particularly, following the fallout surrounding the “Banksters” and the Occupy Wall Street movement and other symbolic and real representations of “greed” in the traditional banking establishment.

People are starting to take their money away from Big Banking and feel more safe in community based (but still Federally Insured!) Credit Unions where they feel they are treated as a person and not just a number. This influx of new blood is leading to credit unions establishing a larger and more diverse customer base and being able to become competitive in the lending and savings markets.

Credit Unions have been doing a great job getting the word out about and offering personal service on “smaller” loans such as Home Improvement Loans, Fully Secured Loans utilizing your credit union share certificates as collateral and other loans that are decided at a much more personal level than one expects and tends to receive from a traditional bank.



The trend towards a more popular opinion of credit unions as opposed to banks is not a new one. As illustrated by the above video, the anti-Big bank feeling in the world is quite obvious, enough so to spur this ad campaign that plays off of the “Apple vs. PC” concept and turns it into “Bank vs. CU”

There really is no guarantee that the Credit Union you select will have better rates or offer more personal service than your bank would but its rather easy to simply try another credit union! It does take some smart shopping and some discovery to find the right financial institution for your own needs.  But in the end its worth it.

Credit Unions are member owned so at least if you come across any practice you dislike you have a board you can point fingers at or attempt to influence unlike the faceless global banking corporations we have become accustomed to shaking our fists at. 

Despite just how cold and bitter the financial world feels right now, there remains hope on the horizon for home owners and property investors. If you’re in a position to repay a mid-term loan, and your prospective new home needs an overhaul (or you’re a real estate investor), there are plenty of companies out there that are more than willing to meet your needs.

Rehab hard money lenders are doing big business, more so because they’re providing a bridge between those that need money and those that can’t get it via more conventional money lenders. Banks and big financial institutions are tough nuts to crack, and none of them seem to care that we (the men on the street) weren’t the cause of the 2008 crash – they were.

Still, if you’re looking to secure Chicago hard money loans, there are plenty of lenders dotted around the state that are willing to take up the slack left by the banks. Generally most of them lend to both commercial and residential applicants, and providing you’ve got a mid-range credit score, you should find that your bases are covered by the loan offer.

You’re also more likely to secure a rehab loan on medium to large properties as it’s worth bearing in mind that these companies base some of their evaluation (part of that being the risk that you present with) on an increase in the properties value post rehab-works. Another aspect to bear in mind is the fact that it’s more likely that you’ll secure funding as a non-occupier. Generally this is the norm rather than the exception.

As there are more than a few companies out there, make sure you do your homework first. Don’t, whatever you do, jump on the nearest, the easiest to apply to and so on. Look at their background, who they deal with, how they deal and what rates they offer. See if their open to negotiation (many are) and who they’re affiliated with. Treat your application much as you would any other form of borrowing, be sensible and make the right choice.

20. March 2012 · Comments Off · Categories: Asset Based Lending · Tags: ,

If you are in need of cash, say, for a new business venture or for urgent personal expenditures, you can use gold assets, such as bullions or jewelry. Many people today put their money in gold in order to create more diverse portfolios because the price of gold moves opposite to that of stocks in the global market. This is the general picture and having around 10% to 15% of your investments in gold or other varieties of precious metals, like silver, palladium or platinum is recommended by financial experts.

One form of gold that you can use as collateral is the bullion. Various types exist, like the more recognized bullions, such as the American Gold Eagle and the Krugerrands, as well as newer editions, like the 2012 Chinese Pandas and Australian Kangaroos. Take note that bullions are different from the coins that were or are used in circulation.

Those used as currency are known as numismatic coins and are normally collected for their gold content and other critical attributes including age, minting, and rarity. But for the bullion coins, their value is only based on the gold that they contain. The quality of the gold must be high, with fineness of about .9999, meaning that the coin contains 99.99% gold.

Carat wise, this is equivalent to 24 carats. Examples of coins that are 99.99% pure are the 2012 releases mentioned earlier, as well as other recent coins like the Lunar Rabbit (2011) and the Lunar Dragon (2012). Established coins, like the Krugerrands, have fineness of about 91.6, which is equal to 22 carats. This is almost similar to the fineness of the American Gold Eagle. You can check United’s Rare Coins to see the selection of bullion coins on hand, as well as their varying fineness and features.

Using gold in order to loan from banks is actually very helpful in improving the value of gold in the world financial market. By having this as collateral, you take your gold away from the scene, so to speak. So, you aid in increasing the demand for this precious metal. With increased demand and less supply, the price of gold will be sure to increase too.

All in all, gold is definitely an asset that you can use in order to loan money from huge banks. Some financial institutions even accept numismatic coins in exchange for loans because these collections are normally backed by gold. To learn more about coins, bullions and other precious metal options that you can utilize when borrowing money, see tips and advice on reliable sites, like United Rare Coins & Precious Metals.

They say that nothing in life is free. And, for the most part, that is true. However, there is one free service that seems to be taking hold in the banking industry; free checking accounts. Of course, there are certain criteria that must be followed for most of these accounts such as having a minimum monthly balance.

While a lot of people have switched to online banking and pay their bills directly from their bank account, there are still some stallwarts who insist on still using paper checks to pay their bills. And, there are also those who don’t have access to a computer and want to continue to do things as they always have done them.

Many institutions that you would not associate with banking now offer bank account. That includes supermarkets who not only provide a debit card, but also provide free checking accounts and points back on any purchase you make on that debit card.

There are many banks who also offer free business banking accounts. The minimum monthly balance accepted is slightly higher than expected for individuals. Most banks seem to expect that the client keep a minimum of $3000 in their account every month before offering them free services such as checking. That is not a lot of money to most businesses.

Like with individuals, most businesses now do their banking online. However, not all of their suppliers have come that far and many employees do still expect to receive a pay check rather than have direct deposit. While it is not a huge financial outlay, having a free checking account which comes with free checks will ensure that prices are not raised because of business expenses and that employees may even get a raise because of it.

Banks want your business so they will try and offer services that draw you into their bank, free checking is just one of those perks they offer.