GOLD- An Investing ‘Safe Haven’

Homer called gold ‘the glory of the immortals”. For Incas, gold was the sweat of the sum. Egyptians believe that gold supports them after the life. For thousands of year, gold has tempted explorers, supported empires and has become a market barometer. Its value stems from its rarity. A direct link between gold and currency emerged in 550 BC, when the first gold coin was used in Libya. In the 19th century currency around the world was fixed to gold. This lasted till 1971 when President Nixon announced that the US would no longer exchange dollars for gold at a set price.

For investors, gold still glitters in times of crisis. Its value peaked $1900 an ounce in 2011 and demand often spikes at times of market stress as investors look for a safe haven. Despite the allure, gold is not immune to economic reality.

The thing about gold is that, it has a long term store value. Macroeconomic analysts often identify gold as ‘Purchasing Power Parity’. Gold is a way of anchoring into valley on an international basis. Therefore, it is a safe haven for people who are particularly suffering from currency crisis. Gold is traditionally used as a safe haven destination in times of uncertainty.

The price of gold is normally calculated in dollars and moves in the opposite direction to the greenback. This is due to if the US currency gains in value, then it takes lesser dollar to purchase an ounce of gold. The price of gold wrecked in March as the dollar bestirred. Due to this, the spot gold price (the cost at which the precious metal can be instantly traded) fell below $1500 per ounce for the first time in 2020.

WAYS TO INVEST:

People can invest in physical gold in the form of coins, bars or jewellery. To store it safely, and to find a market to trade it through, is costly.

Another way of investing gold is buying shares of gold mining companies. This can be acted as a leveraged play on gold if its price goes up. If the profits of the mining company go up this would potentially boost returns.

One of the most trusted ways to invest in gold is Exchange Traded Commodities (ETCs). They are an investment vehicle traded in shares on an exchange, which tracks the elemental pricing index of that commodity.

In the meantime, funds can associated these different types of exposure to gold and therefore, making it perhaps the best way to an assorted solution.

 

 

Gold tends to recover within the days and weeks afterward and in general goes to new horizons, exclusively if equities remain depressed. If we go through the recessions, globally we will witness selling of gold in order to meet additional margin calls.

Investors generally buy or invest in gold for diversity from standard assets inclusive of stocks, bonds, real estate and private equity. Investors are also attracted towards gold because it is liquid, easy to buy and sell.

The fact that gold is an anonymous, portable currency, that holds its value over time and acceptable virtually everywhere makes it stand out from the crowd. Fxtriangle can help you build substantial wealth by investing in forex managed accounts through reputable brokers. Managed account trading service is for such investors who are novice and has limited or no idea about the forex market.

 

 

 

 

 

 

The Nuts and Bolts of a Business Plan

Do you need investors? Looking for a loan? Do you want to apply for a grant? Or has the time just come to do a self-analysis of your business? Are you expanding your business? Looking for new markets? Seeking the next level in your business? These are all times that you need a business plan? What are the nuts and bolds of a business plan?

All business plans have more or less the same sections some even have the same content.
However, when they arrive at the investor’s or lender’s table some remain where they are and others pass to the “I’ll read them later” pile or worse still the trash can! So how do you make your business plan readable and memorable for all the best reasons.

Let’s look at what really is at the heart of a business plan. A business plan is a methodology that defines and integrates the activities that are necessary for a business idea to become a company and provides expectations that prove it will be profitable. In other words, it is the hook to get an investor and tell them that your idea is innovative and will be very profitable. Note those two important words: innovative and profitable. No investor will be interested in a company that is not going to be profitable enough to give them their investment back plus a very healthy profit. Now the what could be an interesting word – innovative. For a company to be successful it must have something that is different to all the other companies working in the same market. After all if your company is going to be the same as all the others, they are hardly going to move over and let you take their customers. No, your company needs to have something different that will attract these customers away from what they buy all the time. So innovative in some way, be it products, business model or service.

Lets add another word that your need to prove within your business plan – viable. Your investor or lender wants to see that you company is going to be viable. If you do a Google search about the “Internet Bubble” of circa 1995 you will see that thousands of investors invested and lent to new fangled internet companies that promised to make them millions of dollars in easy profits. Memories are long and now investors look to see that new companies are going to be viable for the for seeable future so that they continue to receive an income stream and have a good chance of getting their loan or investment back.

Your business plan should be a communication tool selling an original idea that serves to attract and convince people that you have the ability to implement the plan by establishing and managing the company.

At the beginning we highlighted other reasons for business planning. In addition to raising funds, your business plan is also the best tool for you to assess the viability of your business.

So that is the NUTS of a business plan, lets look at the BOLTS that hold it together:

Professional: Internally it should be well structured with an index, page numbers, headings and bulleted paragraphs that explain complex matter. Plenty of graphics break up the boredom of too many words. Externally it should be expertly bound and have a colorful and attractive cover page. It stands to reason that full company details and contact information should also be on the front cover.

Tempting. Written in a way that encourages the reader to assess the possibilities of entering the business. Take care of the writing style, be concise but not brief and certainly not so wordy that tiredness beckons. Keep to the point, zwoding extraneous information that does not support your business planning or business model. Avoid jargon and if you must use initials ensure that the first example is spelt out completely with the initials in brackets afterwards.

Dynamic. You have to be creative, but with some restraint. It is best if you tell a story but not one that is found in the fiction section of a library. If the business you propose does not invite big flourishes, save them. It can be counterproductive to distract the reader. Creativity is important as long as you highlight something about the business and is there to keep the attention of the reader. Creativity must only be used to paint a picture of how the business will operate in the future.

Accurate. Clarity is fundamental, but so is accuracy and truthfulness about the current state of your company and its future aims. A little bit of license is offered by the reader but they do expect you to be truthful about your figures, customer numbers and state of the production of your goods.

Ordered. Guide your reader through your business plan and put supporting documentation within the appendix of the report. Although the key information should be in the main sections of the report, in the appendices you can include secondary data, market study results, resumes of professionals and any letters from recommendation or favorable report.

All the Ws of a Business Plan

A business plan is a written description of the future of your business and more importantly, how you are going to get there. It is a document that explains what you are going to do to make your company profitable and how you are going to achieve this. It defines both your business model and your strategies to make this business model work and more importantly profitable.

Normally when a business idea arises, you know what resources and capabilities you have at the start of your business and where you want to go in a certain period, usually in 3 or 5 years. But what is the way to reach that goal? Where to start? How to arouse investor interest? Even, how to get your business off the ground? Everything seems so easy when you have the great money winning idea and concept. It is how you are going to achieve these dreams and get enough money to keep the business going for many years to come.

Writing a business plan is to build a map that will guide you to where you start making money with your initial business idea. At is very basic structure, your business plan is a mixture of strategies and plans. It involves financials, marketing, staffing and products. Think of it as the foundation to your new business.

WHAT are the reasons that I might need one?
• To look for investors.
• To apply for a loan.
• To establish the viability of your business idea.
• To make improvements to your current business.
• To expand your current business.

All of these types have different emphasises and a different structure.

WHAT is a business plan?
It is a tool or document that describes a business opportunity or idea, the work team, the operational and marketing execution strategies, the business risks and the economic viability of your business. A well written document guides you to turn an idea into a viable business.

It can also be defined in another context in that the business plan becomes a fundamental tool within the analysis of a new business opportunity, a diversification plan, an internationalisation project, the acquisition of a company or an external business unit, or even the launch of a new product or service within the current business.

To summarise, both for the development or launch of a startup and for the analysis of new business investments, the business plan becomes an indispensable tool. So even though you have an established business, you will still need a business plan as you expand and improve that business.

A business plan is never finished and should be reviewed from time to time at least annually but certainly when large changes to an existing company are anticipated. This implies that every plan must adapt effectively and efficiently to the changes, helping the project to continue.

WHAT is the point of a business plan?
Many entrepreneurs think they only need a business plan when they are seeking investment or when the bank asks for one. However the act of business planning, when completed correctly, enables the entrepreneur to carry out an extensive market study that will provide the information required to design the best possible business model that will be both profitable and efficient.

Additionally, the business plan will develop the strategic measures for all functional areas that will enable them achieve the objectives for the new business.
Once written, the business plan will serve as an internal tool to assess the management of the company and its deviations from the planned scenario. Proposing, if necessary, adaptations to the agreed business model in order to obtain updated information for the daily management of the company. This will include preparation of the required changes and processes to bring the business back on track.

So lets dive into the concepts behind business planning a bit more.

The WHY of The Business Plan
• Why do you want your business plan?
• Why are you writing the plan now?

The WHAT of the Business Plan
• What is the purpose of developing a specific plan?
• In what period do you consider it possible to carry out your projects?
• What is your business model?
• What is your Value Proposition?
• What are your products or services to be offered?
• What positioning do you plan to develop to compete?
• What are your measurements of success?
• What markets do you plan to penetrate?
• What market percentage do you estimate to obtain?
• What margins do you consider possible?
• What income do you consider you will receive?
• What are the costs of expansion?
• What are the costs of obtaining new customers?
• What do you want to do with your business?
• What strategies do you want to undertake – financial, marketing and planning

The WHERE of the Business Activity
• Where will your products be sold from? Shop, office, website, social media, road side, party planning,
• Where are you based? Locally, centrally, virtually etc.
• Where are your products produced?
• Where are your distribution channels?
• Where are they going to be sold?
• Where is your market?
• Where will your staff need to be based?

The WHEN of your business planning activities
• When will you need to start your new activities?
• When will they end?
• When will your investor need to invest?
• When will your investor get their money back?
• When will you have enough staff to carry out your new changes?
• When will your products and services be available?
• When will your products need to be updated and/or improved?
• When is the best time to attract new customers?

WHO do you present your plan to?
• Bank for loan purposes and they will take a charge over a property usually.
• Investor to join your company as a shareholder.
• Angle Investor to join as a shareholder but also be involved in the running of your company.
• Management team so they know what is expected of them.
• Suppliers who will be offering credit.
• Director level hires so that they are encouraged to join your company.
• Believe it or not the entrepreneur should also refer back on a regular basis.

As you can see there are a lot of Ws involved with a business plan – the biggest W is why should you write a business plan and the answer is – because it is such a great business tool.

The Structure of Your Business Plan

Your business plan is vital to establish the structure of your business, its aims and objectives, strategies, products and staffing. It is used to plan and manage your business, apply for funding or show to potential investors. It has ten main parts and these are:

1. Cover and index
Sounds a little silly, but a great cover to your business plan will show the professionalism and care that has gone into its production. It is also the ideal place to include your company logo and contact details. If appropriate, include photos of your products.

Vitally you should also include your company name and number as well as your contact details such as address, website, social media accounts and email and phone number of your relevant director. You will surprised at the number of people that forget this feature.

To help potential investors to navigate around, the index must include all the points of the business plan with the corresponding page number. Make it as complete as possible so that the reader has a clear idea of what the document contains.

However producing the index also gives you, the writer a great planning tool to ensure that you include all the points and information you need to include.

2. Executive summary with the needs and objectives of your business
In the first part of the document you must make a descriptive summary of the idea that includes the following points:
• The opportunity in the market
• The product or service and its advantages
• The management team
• Financial summary the financing needs and expected profitability

By writing the executive summary first, your put all the information down that is in your head. You can always come back to it at the end of your wiring of the main body.

Remember, you need to capture the attention of investors in approximately two pages where you will summarise the most important points of the text. You must also take into account several things:
• Vitally you must define the need or problem that your business intends to solve.
• You need to define the fundamental objectives of the company.
• You need to tell the investor at what stage your company currently is. Whether you are pre-production, starting to expand or in profit for example.

3. Plan out your business
Here is the point where you get your scrap paper out.
• You must describe the mission of your business – that is what you hope to achieve. Then you need a list of actions that your company needs to get to this point.
• Next you need to work out how you will solve the business problems you have identified.
• Now describe what your product or service is, what customers will get with their purchase and what their weaknesses or inconveniences are.
• Discover what price point your potential customers will be comfortable with.
• Lastly you need to discover how you can find these customers.

Often this can all be defined by the use of a business model canvas and this is the subject of another of my articles. You can purchase consultancy to produce this model.

Usually there are already companies that are working for the same goals. Identify them and ask yourself: How am I going to differentiate myself from my competitors?

4. Explain the structure of your business
Making a business plan involves examining the strengths and weaknesses of your competition, once identified you can justify why your business is unique. You must distinguish yourself from the crowd to increase the investment opportunity. That is, refer to the following information:
• Describe what you will be selling to whom and at what price point.
• Introduce your branding concepts – are you going to be a luxury company for example or pile it high and sell it cheap kind of company?
• Describe how you will fulfil an order – in other words, the whole process from purchasing the products yourself to actually delivering them to your customer and offering after service.
• Clarify how you will cover the main areas of production, sales, marketing, finance and administration.
• Include management, sales, stock control and quality control accounts.
• Define how you will sell your products and analyse, if necessary, the location of the company and the advantages and disadvantages of this situation.

Make sure that you solve the following investors’ doubts: What are the products of your competition and how do they create them?

5. List the characteristics of the market in which you will develop your business
You will have to analyse the market conditions: how big it is, how fast it is growing and what its profit potential is. Explain how you are going to investigate your audience and with what tools.

Know the target of the market in which the business will be developed and direct marketing strategies towards that target. If you do not have a working marketing strategy you will lose time, effort and money.

Answer the following question: Where are you going to find your customers?

6. Devise promotional strategies
This is where the marketing plan of your business should be included. It is perhaps one of the most relevant steps when making a business plan. Promotional and marketing strategies could determine the success or failure of your company. Try to answer several questions:
• How are you going to position your product or service? This is where you want the 4 Ps of marketing: Price, Product, Promotion, and Place.
• Compare features such as price, quality and customer service with your competitors.
• How are you going to sell to your customers? Phone, web page, face to face, agents?
• How will you identify potential customers?
• How are you going to promote your business? Advertising, public relations, email marketing, content strategy, social media etc?
• What benefit will each part of your business achieve?
• Why is someone going to abandon your current competitors to buy in your business?
• How are you going to attract them to your company and its products?
• What is a fair estimate of the number of customers you will achieve each year for the first three years?
• What will be your estimate of the cost of attaining each new customer?
• What is the estimate of the cost of retaining each customer?

7. Define your source of income
This is where you put down all the information about what your company will be selling and where the source of income will come from.
• The products and services you will be providing.
• Any advertising fees, commissions, membership fees etc. you will receive.

The analysis should include: price structure, costs, margins and expenses.
Include details of your anticipated cash flow over the first three years. Cash flow is a major consideration. In web based companies it is referred to as the burn rate.

8. Your team
Here is where you wax lyrical about the strength of your directors and major staff. Include their experience in similar posts and what they can do for your fledgling company. Include basis resumes for each of them and state their responsibilities. If you have a particularly renowned supporter, mentor or director here is where you mention it.

9. Your financials
When you reach this point when making your business plan you should start translating everything you have said into numbers. That is, analyse the financial forecasts of your business. Also include your financial strategy – how you will manage your cash flow, vital for any new company. If don’t have a plan, the business could suddenly sink or fail. If, on the other hand, you receive unexpected success, your goals may suddenly change and you will need a new business plan. Therefore, you should assess the risks of your business, identify areas where something could go wrong and explain what you would do in that case. You should include any other investments you have or are going to receive. Details of your share allocations, particularly large percentages, should be included.

9. What you are going to do with the investment
Very importantly, include what you are seeking the financing for and how and when you intend spending the investment. It is vital that the potential investor sees that the company will be vastly improved from the investment.

State how soon and how often the potential investor will see a return for their investment. Also include the offered shares as well as their potential involvement with the company after they have invested.

It is vital that they are offered an exit strategy so that they can have a healthy return on their investment and then move on to the next new company.

10. Annexes
It is very possible that after making the business plan you need to give additional information to complement it. For example:
• Market research data that you have used.
• Resumes of the team that will form your company. This is very important if you are seeking high levels of financing.
• Technical specifications of the product or service (you can include photographs).
• The names of some potential customers.

Creating a business plan involves writing many pages with attractive, dynamic and precise texts that capture the attention of very demanding people. It should attract the attention of investors, who despite having read hundreds of them must find something unique in your business plan.