a business telephone

Proper Business Call Etiquette: Saving Face Over the Phone

Following its invention during the late 1800s, the telephone became an integral component in business operations. Despite all the technological advancements brought about since that time, the phone still holds its own in the business world. Voice-to-voice communication is – such as face-to-face communication – just faster, simpler, and more personable than the alternatives in some cases. Using proper telephone etiquette, though, could make a world of difference in the outcome of a business call.

Send the Right Message

Business calls require a balance of professionalism, amiability, and common courtesy. Finding such a balance isn’t always easy, but it’s essential. As a general rule, the phone shouldn’t ring more than three times before being answered or the person on the other end of the line may feel the call isn’t as important to you as it is to him or her. At the same time, picking up immediately has a way of catching a caller off guard. From there, attitude and technique are everything.

  • Smile before Answeringsmiling woman on the phone

    Though the person to whom you’re speaking can’t see you during a traditional call, he or she can usually sense your disposition. Whether your heart is in the smile or not, it’ll change the tone of your voice to a more pleasant one.

  • Names are Important

    We’re all individuals, and we like to be treated as such rather than just another sale or business opportunity. If the caller or callee doesn’t offer an introduction during initial contact, ask for a name. Remembering this identity for future reference is equally critical.

  • Use Your Voice

    Speak clearly and somewhat slowly while holding the phone approximately two inches from your mouth. Any farther away would leave the other person straining to hear you whereas holding the phone closer tends to make voices more garbled. Speed-talking is equally counterproductive.

  • Give Appropriate Answers

    In the midst of a business call, the phrase “I don’t know” shouldn’t be part of your vocabulary. It’s unprofessional and off-putting to the person on the other side of the conversation. If you don’t have an answer, say something to the effect of “Let me look into it” or “I’ll check on that.

  • Avoid Lengthy Holding Patterns

    No one likes to be put on hold during a call, but it’s sometimes unavoidable. Should it become necessary, be sure to ask if it’s okay with the other person. If you expect to be otherwise engaged for a considerable amount of time, it’s better to ask for a phone number and call back the other person later. In the event you realize mid-hold you’ll be held up longer than anticipated, check back in to let your conversation partner know you’ve not forgotten about him or her and follow callback protocol.

  • Break the Vicious Cycle

    Getting the runaround on the phone may very well be the most irritating aspect of calling. Never transfer someone without a courteous explanation, do your best to ensure you’re transferring to the appropriate party, and always be sure the person you’re transferring to is available for conversation.

  • Politeness is Essentialman on the phone

    Always be polite to the person to whom you’re speaking even if he or she isn’t returning the favor. Choose your words carefully. You’ll inevitably run across people who take everything you say as an insult but do your best to keep things on a diplomatic level.

  • Conclusions are Crucial

    End every call with a pleasantry, such as “thank you for your call” or “have a great day.” Don’t hang up until you’re sure the other person has nothing else to say.

As an added hint, keep your purpose in mind. Business is increasingly making its way into the home, and that can be a precarious scenario on occasion. Helping the kids with their homework or yelling at the dog and cat to stop fighting during this type of call isn’t exactly conducive to a business environment. If necessary, find a quiet room away from commotion and distractions to conduct phone calls.

At times, doing business over the phone can be easier and more productive than communicating via text or email. It also brings a more personal touch to an increasingly digital world. Though the benefits of vocal interaction are many, lacking proper phone etiquette could hamper productivity.

Mergers

Mergers And Acquisitions: Past, Present, And Future

Mergers and acquisitions (M&A) have become a major part of the modern corporate landscape. Under this process, two businesses will either combine to form a single entity (merger) or one will purchase the other (acquisition) and, typically, take over its operations.

With startup culture thriving and businesses needing to think on their feet to stay afloat in the changing financial landscape, the thought of absorbing a potential competitor or bringing in a new asset to revitalize operations is more appealing than ever.

In fact, 2015 and 2016 were the biggest years ever for major M&A transaction acquirers and post-merger integration. The tech industry, in particular, is a focus for M&A activity, but it’s not the only arena in which this can be a smart strategy. Learn more about what companies considering either a merger of assets or an acquisition need to contend with in the digital age.

New Challenges Posted By Digital Acquisition

Acquisition

Digital acquisitions are a driving factor in the prevalence of M&A transactions across the globe, but there have been some notable failures in this arena in the past. Most startups are created with the end goal of being acquired by new parent firms that can boost the brand and provide access to new resources for the continuation of successful innovation.

But not all corporate parents are ready for this kind of responsibility. There are many legal and financial factors to consider in the M&A process, but when it comes to digital businesses, there are a few additional elements to watch out for.

Corporate Culture Differences

Digital businesses operate differently than what most seasoned businessmen and women are used to seeing, and it’s driving major corporate culture changes that pose major challenges for acquiring companies.

From flexible work arrangements to relaxed leadership structures and a focus on innovation over the status quo, tech company employees are often used to management and office environment styles that are much different from what their new bosses are ready to present.

calture

But tech companies often build a culture around the service they provide, meaning their users come to expect a certain ethos and style from the products they love. Sometimes, there’s not enough attention paid to the unique, intangible factors behind a tech company’s success. Initial valuation doesn’t tell the whole story. For example, Condé Nast acquired Reddit in 2006, but its plans for the site weren’t initially clear.

After a couple of years, it became obvious that Condé Nast and its parent company, Advance Publications, simply didn’t know what to do with the Reddit brand. The old-school publication approach wasn’t going to work well with the Wild West style Reddit thrives on.

Reddit was never going to be able to successfully rebrand as a straightforward online publication and it didn’t take long for Advance Publications to cut Reddit loss and restore its independence. However, rather than selling Reddit off entirely, Advance Publications remains a majority shareholder in the company, making its initial investment a bit more worthwhile.

Reddit’s original founders took back over and are steering the site (relatively) smoothly into the future. Replicating the original success of some of these companies’ founders isn’t always an easy prospect, especially if the acquiring company doesn’t have a deep, organic understanding of what the product is all about.

Plans For Integration And Improvement

Ideally, a tech merger or acquisition will benefit both the buyer and the seller in the long term, not just in the temporary sense of jumping stock prices and a sky-high sell out the payday. Companies that buy tech startups really need to think carefully about how they’re going to integrate this new technology into their existing approach and how they can improve this new technology even more.

new technology

Very few tech companies are sold having reached their full potential. Arguably, no tech company will ever truly reach its full potential since there’s so much room to innovate and grow in this area. So the acquiring organization needs to have a game plan in place to justify the purchase and ensure it’ll pay off in the long run. Often, it seems that corporate acquisitions are motivated by a certain degree of cluelessness.

There are a few high-profile examples of this. Fox’s 2006 purchase of MySpace, for example, couldn’t have been more ill timed or poorly managed. Right as Facebook was starting to rise, Fox bought MySpace and made a strange attempt to repurpose the social media site into a music-focused portal, but the shift was abrupt and, most importantly, wasn’t really responding to any particular demonstrated need.

It was a clumsy attempt to leverage one of the more successful elements of MySpace, independent music discovery, into a more profitable model, and it failed miserably. Plus, there didn’t seem to be much, if any, investment in improving the MySpace user experience, which left the stalwart social network vulnerable to the challenge posed by upstart Facebook’s streamlined design. Five years later, Fox sold MySpace for a massive loss. Fox just wasn’t ready to do what needed to be done to make MySpace enduringly successful.

Realistic Cost/Benefit Analysis

Both of these factors point to a broader issue: how will the acquiring company benefit from the presence of this new brand? Due diligence is different on this new frontier. Most tech startups aren’t yet profitable at the time they’re acquired.

The acquisition itself is considered the necessary step in that brand’s road to financial success. Valuation numbers can appear sky-high and a buyer that isn’t savvy enough to really understand tech may think that valuation tells the whole story. But it doesn’t.

Realistic

To successfully integrate a valuable new entity into the fold, the acquiring organization needs to carefully determine how this new tech product will actually bring in revenue. There needs to be a plan in place for helping the digital asset reach its full potential. Simply acquiring a digital company isn’t going to suddenly transform everything.

The acquiring organization has to have a specific reason why this particular entity is a good fit for their mission and needs to be prepared to nurture their new acquisition immediately following the sale and in the future. Post-merger integration isn’t an organic process but a deliberate, well-organized effort. If a corporate parent can’t think of a way to integrate the new brand, chances are they won’t benefit from the purchase very much, if at all.

Why Do M&As Fail?

We’ve just given some examples of failed (or nearly failed) M&A efforts in the tech space, but this isn’t the only area where an acquiring parent can succumb to blind spots and bad analysis. There isn’t a single reason why a merger or acquisition fails; each one presents its own case. However, there are some consistent factors. As indicated above, a failure to properly plan and consider what the new brand will do can really do a lot of damage.

prolonged

Simply seeing that an entity is successful on its own does not provide sufficient evidence that that entity will continue to succeed once acquired or merged. There are examples in other industries of a company that overestimates the value a new asset can add. For example, in the pharmaceutical industry, Teva Pharmaceuticals’ purchase of Allergan’s generics business resulted in claims of gross overpayment from both investors and financial analysts.

There are a few reasons why the deal was thought to have failed before it even went through. For one, Teva was somewhat desperately chasing a solution to the potential revenue gap caused by the patent expiration of its most expensive branded medication. But there were also external factors in play, including the prolonged scrutiny from US and EU government regulators responding to growing public anger over drug prices.

This isn’t to say that the acquisition can’t pay off for Teva in the long run. But the ball was already rolling, the deal in progress, when external factors arose to make the deal seem less beneficial. Depending on who you ask, it could be argued that Teva didn’t really have a way of seeing what was coming when they pursued this option. As with all business activities, M&A is a calculated risk.

The key is to actually perform those calculations before taking the risk rather than diving in headfirst without really analyzing all potential outcomes. Focusing on the human element, both in terms of the people who make up the newly combined organization and the consumers who will respond, is an essential part of the process. Numbers alone can’t tell the whole story.

The Current And Future M&A Landscape

There have been a few notable M&A events in 2017 that indicate just how much businesses can benefit from either merging with or acquiring (or being acquired by) another organization. One of the most notable is Amazon’s $15 billion acquisition of Whole Foods, signaling that the e-commerce giant credited with destroying retail may realize that in-person purchases remain highly appealing for many consumers.

Landscape

Amazon’s exact intentions remain a mystery, but it’s safe to say they wouldn’t have spent such a massive sum on an uncertain strategy. Some companies have used M&A as a strategy to sidestep the traditional IPO process, which is exactly what Purple Mattress did in the summer of 2017.

Direct-to-consumer mattress sales are big business and Purple actually merged with a publicly traded shell corporation, which instantly gives Purple public status and secured the mattress manufacturer a $1.1 billion valuation overnight.

Another 2017 M&A, this time the acquisition of a startup, MindMeld, by an established industry leader, Cisco, highlights one reason why M&As have become so common. MindMeld is an AI startup that built a conversation-monitoring bot that can interject useful information in the midst of a conversation.

Their initial use case involved running the program in the background on a mobile device at all times so user conversations could be annotated and supplemented with information. The problem? Not many people are interested in having their private conversations tracked in this manner. But Cisco can certainly make use of this tool to supplement their corporate communications technology.

On its own, MindMeld likely wouldn’t have found its market, but as part of Cisco, it’s got a clear and sensible purpose. Tech is by far the hottest sector for M&A activity; as a whole, tech, media and telecommunications (TMT) made up the lion’s share of deals reflected in Deloitte’s 2017 M&A index.

There’s no reason to assume this won’t continue, especially as startups continue to receive the necessary funding to develop technologies that will be highly appealing to potential parent companies looking for a way to secure relevancy in the coming years.

Startups can continue to expect some sort of corporate interest from large, established companies, though whether this will level out as more and more companies realize they’re not making the best long-term investments remains to be seen.

Healthcare may also be a sector to watch and not just in the space where it overlaps with tech. However, an uncertain legal landscape surrounding the industry in both the US and the EU may lead to more potential disasters like Teva/Allergan. Retail is also an interesting industry for M&A. Will Amazon/Whole Foods go bust or will it result in the retail apocalypse some are predicting?

We’re currently living through a major M&A boom and it’s hard to know what the future holds. It could be that this is just the way it is now, but antitrust watchdogs and competition advocates might not be too happy to see small enterprises slowly get absorbed by larger entities.

2016 did see a slight dip in M&A activity from 2015, but that may have been a result of the wild uncertainty associated with politics and finance last year. This year isn’t necessarily more stable, but it could be that organizations have adjusted sufficiently to bounce back to previous highs. Even if 2017 doesn’t match or top the two previous years, it’s clear that there’s still a lot of interest in M&A. Acting on that interest could be the right move.

Covered table for a business dinner

Business Dinner Etiquette: The Dos and Don’ts of Dining with Colleagues

Business dinners are ideal means of interacting with associates outside the office environment. Though plenty of opportunity for showing off a well-balanced blend of professional and social skills awaits in such a setting, lacking in either could result in disaster. No doubt your business sense can hold its own, but understanding the conventional dos and don’ts of business dinner etiquette could make all the difference. If you keep these things in mind, you will be able to successfully conclude your business dealings.

First Things First

Entrances tend to set the stage for the entire event. Although a number of people prefer to blend quietly into their surroundings rather than make themselves known, the first order of business is to shake hands with everyone at the table. Introduce yourself to those whose acquaintances you’ve not yet made. From there, the next few elements are largely a matter of watching the host or hostess.

  • Don’t sit until the host or hostess has been seated.
  • Napkins should be placed on your lap but only after the host or hostess has done the same.
  • Discreetly try to overhear his or her order, and choose something similarly priced for yourself. Alternatively, ask the host or hostess for recommendations.
  • Along those same lines, don’t order an appetizer, cocktails, and dessert if your host asks for nothing more than iced tea and a hearty salad.

Simple, polite greetings, introductions, and following the host or hostess’ lead should get you through the first portion of the experience nicely. Having said that, quite a few other rules apply in a scenario like this.

Pay Attention to What’s in Front of You

place setting on a dinner tableDinner at home isn’t generally a formal affair. A plate, spoon, fork, napkin, and drink are all you need to achieve dining success. When in an upscale establishment, though, a few extra pieces work their way into the puzzle and can cause considerable confusion. In general, formal place settings include, from left to right:

  • Salad Fork
  • Dinner Fork
  • Dinner Plate
  • Dinner Knife
  • Salad Knife
  • Soup Spoon

Bread plates and butter knives appear on the left above the forks, and water and wine glasses sit to the right above the knives and spoon. If there are a spoon and fork above your plate, they’re reserved for dessert.

Remembering which piece of flatware serves what purpose can be tricky, but you basically start from the outside edges for salads and appetizers. Work your way inward for the main course. Keep the bread plate and glasses in their respective places to cut down on mix-ups with those seated next to you.

Moving Further along

Since the host or hostess can’t be your guiding light for the duration of the event, having your own level of savvy goes a long way toward making a great impression. This is where the matter gets a bit more involved.

  • Should others arrive at the table after you’ve been seated, stand to greet them.
  • Don’t pull out guests’ chairs for them. This is a nice gesture on a dinner date, but it’s not the norm in a business setting.
  • While asking the server a few questions regarding the menu is acceptable, requesting long explanations about several of the available options leaves everyone at the table waiting and has been known to generate animosity among dinner acquaintances and waitstaff alike.
  • Break off bite-size pieces of bread and butter each individually.bread on a small plate
  • Cut one or two bites of food at a time rather than carving up an entire steak or chicken cutlet in a single session. Cutting salad and pasta into manageable bites helps foster politeness as well.
  • When talking with others around the table, place silverware on your plate rather than slinging it around. Also be sure to swallow the food in your mouth before speaking.
  • Should conversation turn to religion, politics, or other potentially heated topics, politely opt out of the discussion or offer a brief, neutral response if addressed directly.
  • If a sneeze or cough arises during the meal, turn toward your left shoulder and block it with your left hand. Keep in mind, napkins and tissues aren’t interchangeable during a business dinner.
  • In the event you need to excuse yourself from the table for a moment, there’s no need to provide an explanation. Simply place your napkin on your seat and push it under the table.
  • Avoid asking for a take-home box if you don’t finish your food.
  • Convention dictates the host or hostess is responsible for both the check and the tip, so don’t argue when time to pay comes around.
  • Be sure to thank your host or hostess for the meal.

You have ample personal and professional knowledge to bring to the table. Combining these attributes with proper business dinner etiquette is the key to successfully interacting with colleagues in a slightly more personal setting. Keep these aspects in mind during your next business dinner, and you’re bound to make a good impression.

Economy

The New Economic Frontier: A Sharing Economy

Tech tools are disrupting everything. We don’t even say change anymore—we say disrupt. These changes are clearly apparent when it comes to the sharing economy. Just 10 years ago, the idea of staying in a complete stranger’s house on vacation or getting into a stranger’s car would have been considered incredibly risky, but now it’s the norm.

Whether they’re looking for a better price on an expensive item or want to earn some extra cash by providing services or selling your stuff, the sharing economy offers a lot of appeal for the average consumer. Let’s take a closer look at what the sharing economy is, who its major players are, and how it’s disrupting a variety of different industries.

What Is The Sharing Economy?

The shared economy is based on a concept called collaborative consumption and while digital tools have made this consumer model easier than ever, it’s nothing new. A broad sharing economy definition may include more variety than you think—it’s not always about business in the peer-to-peer marketplace. Any venue that allows consumers to take on both the buyer and the seller role at their discretion can be considered part of a sharing economy.

Sharing EconomyThis means that even old-school concepts like garage sales, flea markets, swap meets, and work trade arrangements are included in the general realm of a sharing economy. Online classified services such as Kijiji and Craigslist are great examples of the ways in which classic collaborative consumption can adapt to the digital era.

However, in most cases, when analysts and experts talk about the sharing economy, they’re thinking about startups and other tech businesses seeking to “disrupt” a specific industry by providing updated tools that make it easier than ever to connect individual service providers or sellers and their customers.

When you use Lyft or Uber to call a car, for example, you’re using that company’s platform to connect to individuals who are willing to “share” their car with you by driving you to and from a destination in exchange for money. In cities where you have to specifically call a cab to show up at your house, this service is a major convenience, and it allows average joes with a car to sign up to drive without having to pass taxi driver tests or join a union.

Often, and especially in the case of profit-driven companies like Airbnb and Uber, “disrupting” can come at a price. Uber, in particular, has been criticized for its aggressive business practices. From potentially abusing the contractor concept for their drivers to violating local taxi regulations and actively silencing protests taxi driver unions, Uber is a great example that “the sharing economy” isn’t always just about sharing.

commercializeMany of the companies in this arena are backed by high-profile venture capital firms and want to become as profitable as possible. Even companies like Lyft, which position themselves as friendlier versions of the Ubers of the world, must find a way to commercialize the concept of sharing.

In this sense, the collaborative consumption concept is only loosely applied to some parts of the sharing economy, but there is still a big market for consumers who want to engage in a traditional collaborative economy but lack to tools to do so. In Latin America, a company called Tem Açúcar has found major success by providing a platform for neighbors to connect and offer or ask for favors from the people who live around them.

Whether it’s borrowing a lawn mower after yours breaks or even borrowing a fancy outfit to wear to an event, this service creates a sense of community that represents the purest and most idealized form of the sharing economy.

Goals And Influence

Clearly there are multiple different ways to whether the motivation is profit for the company, as it is in Uber’s case, or a reduction in rampant consumerism and the building of communities, as in Tem Açúcar’s case, most businesses in the sharing economy ultimately exist to undercut competition and provide their users with the most attractive price on a product or service. This can cause traditional economy businesses to lose business.

economy businesses

The hotel industry, in particular, is feeling significant strain with the advent of online hospitality marketplaces such as Airbnb. A person renting out a room in their house (or the entire house itself) doesn’t have to spend as much money offering that room as a hotel does—a hotel has costs associated with advertising, staffing, and the maintenance of a large property that a homeowner does not. This means that homeowners can undercut hotel pricing almost every time.

It’s hard for a $200-per-night hotel room to compete with an apartment in the same neighborhood offered at $100 a night. Customers looking for a bargain may not even consider looking for a hotel room under the assumption that they’ll find a better deal in the sharing economy. Even the luxury hotel market is feeling some strain, with high-end properties on Airbnb hosting, VRBO, and other rental services offering a glamorous alternative.

According to some projections, Airbnb may overtake major hotel conglomerates like Hilton Worldwide to earn the most market share in the hotel industry, regardless of the fact that Airbnb doesn’t actually own or, technically speaking, operate any hotel properties.

As with other industries, like publishing and entertainment, that has been disrupted by the advent of widespread digital technology, hospitality, transportation and other industries are having to adapt to competition from the sharing economy in order to stay relevant and competitive.

In some cases, businesses compete by copying some of the basic elements that make sharing economy businesses so successful. This allows them to leverage their existing benefits with the tools that often draw people to the sharing economy in the first place.

For example, New York City taxis now use an app that allows you to call a cab to your location. Anyone who’s used both cabs and Uber or Lyft in NYC knows that when cabbies earn that medallion, they learn more about driving around that city than anyone else.

Uber In most cases, taking you a cab is going to get you where you want to go much faster than taking a hired car driven by someone who could have arrived in the city yesterday and is relying on Google maps or the Lyft or Uber platform’s internal navigation to get you where you’re trying to go. Plus, cab drivers are subject to specific laws and regulations, and there’s no such thing as surge pricing (at this point) for NYC taxis.

Overall, taking a cab can actually be a better bet than taking a hired car in NYC. This isn’t the case in all cities, but in cities like London or New York, which require their licensed cab drivers to acquire a huge amount of knowledge about the local roadways, the sharing economy doesn’t necessarily offer a better option than a traditional business that gets savvy about tech.

However, quality alone isn’t necessarily enough of a draw. Luxury hotel chains feel fairly confident that their attention to detail in service will put them over the edge for their customers. After all, your Airbnb probably doesn’t include a concierge, room service, turndown service and valet parking. But those are benefits that are typically available only at the highest echelons of hotel service.

Most travelers would probably be happy to get services like those, but not at the price tag at which they’re currently offered. Participants in the sharing economy tend to be people who don’t have a lot of extra money to throw around. Whether they’re trying to save or earn some extra money, the people who spend money in a collaborative economic system are doing so with a sharp focus on convenience and cost.

Some businesses may be able to compete with that, but others are likely to struggle to survive. The key for those floundering industries or individual business moving forward will be to find ways to out compete for the sharing economy. One thing seems certain, though: Sharing is probably here to stay, in spite of its many drawbacks.

Where To Go From Here?

Where to Go From HereThe companies that hit rough patches in this new economy tend to do so because the world isn’t necessarily built for sharing-focused businesses to operate. Car sharing like Uber drivers and hospitality sharing services are running up against issues like local laws and resulting in legal challenges, competition from newer services that haven’t had time to damage their reputations, customer complaints about problems like surge pricing and the relatively uncontrolled nature of sharing.

As for that relative lack of control, that’s going to be a hard issue for sharing businesses to overcome in terms of goods and service. Craigslist, for example, has rock-solid terms of service that absolve the business from liability in case anything goes wrong with activities facilitated through that site.

If you buy a broken treadmill that was advertised as being in perfect working order, Craigslist probably doesn’t owe you anything. When something even worse happens, the company often finds its hands tied. Uber’s difficulty navigating driver and passenger misconduct issues are a great example of the types of challenges these businesses face going forward.

Because Uber’s drivers aren’t employees, they aren’t really obligated to pre-screen drivers and while they can terminate that driver’s access to the platform, the company has historically been extremely hostile to customers who’ve alleged harassment or abuse from drivers.

The “this isn’t our fault, it’s your fault for trusting a stranger” response isn’t going to work if sharing businesses want to stay on top moving forward. The lack of regulation and relative freedom users enjoy on these platforms might not continue if the sharing businesses themselves can’t find a better way of addressing these issues, which toe or even cross the line of legal liability in many cases.

economyUltimately, trust is a major factor in a user’s comfort with a sharing service. A first-time Airbnb user who ends up renting a nightmare apartment that looks nothing like its photos probably isn’t going to come back for a second round. Better vetting might be a way forward for these businesses, but they operate on such a large scale, often globally, making that kind of attention to detail quite difficult.

If traditional businesses find a way to compete with low sharing business prices, trust and quality could become the major battleground on which market share battles are fought. If that’s what’s at stake, can the sharing economy survive in its present form? We’ll have to wait and see how disruptive these businesses truly are. If they’re able to disrupt their own process and continue staying one step ahead, they’ll likely continue to dominate.

Many yellow bikes standing in a line

7 Legal Issues to Consider in the Sharing Economy

The sharing economy is an ecosystem where people exchange goods and services over the internet, free or for pay. Today’s sharing economy offers numerous opportunities for drivers, hosts, and customers, but certain safety and legal concerns still haven’t been resolved. Businesses in the sharing economy, such as Uber and Airbnb, operate within a legal gray area simply because the law is still learning how these companies work. The new economy poses challenges to housing and traffic laws, and it has resulted in labor disputes in many places. Aside from the legalities, there are concerns that companies aren’t doing enough to ensure driver, host, and customer safety. Below are several legal and safety concerns inherent in the sharing economy.

Rights of Ownership

many people standing in line

Selling your spot in a line?

Can someone share something they don’t own? For instance, the app betrspot lets people sell seats and spots in line. Transactions only transfer occupancy and not ownership, but venues may argue that seats and queue spots are non-assignable licenses and can’t be sold. The earliest ventures into the sharing economy—peer-to-peer file sharing systems—were shut down due to copyright violations. Newer ventures involve lesser questions of ownership, but it’s still worthy of consideration.

Consumer Protection Matters

When someone looks for a pet sitter or a handyman service, how do they know they’ll get the services they pay for? There are understandable fears that an unregulated transaction is a risk to consumer safety. For instance, food exchanged on sites such as LeftoverSwap may have been prepared in an unsanitary manner, which endangers the public health. To solve this problem, companies are implementing two-way rating systems for providers and customers. These systems serve as a self-enforcing protective layer for the consumer and engender a sense of community. Additionally, they’re less expensive than conventional enforcement methods, although research raises concerns that participants may practice discrimination at times.

Taxation Troubles

As far as taxes are concerned, is a rideshare provider such as an UberX driver a franchisee or a small business owner? There’s been little agreement on how to tax participants in the sharing economy simply because there are many different business types. In some instances, a participant may not have to pay certain taxes. For example, it’s not clear whether a host must pay an occupancy tax, but they still have to pay federal and state income taxes. In many situations, it is unclear how transactions could or should be taxed.

Insurance Issues

Who is liable?

When someone uses his or her personal vehicle for ridesharing purposes, are they covered by personal insurance, commercial insurance, neither, or both? If an accident happens, a driver must use their personal insurance policy, but the insurer may deny the claim on the grounds that the vehicle was used for commercial purposes. While ridesharing companies usually provide drivers with a commercial policy, these do not cover vehicle damage. For instance, California companies offer $1 million in liability coverage, which is significantly higher than many states’ minimum coverage level for taxicabs. Additionally, a commercial policy may not offer coverage when a ridesharing driver isn’t in service. Various tragic incidents have highlighted the need for better insurance regulations in the sharing economy, and some ridesharing companies have implemented coverage for any driver who’s logged in and ready to take a fare. Generally speaking, the economy presents an opportunity for insurers to come up with novel solutions for businesses and individuals.

Liability Limits

Take this example. A new skier rents equipment from gearcommons only to injure himself in a tumble down the ski slope. Is the company liable? While companies in the sharing economy face many of the same issues encountered by brick-and-mortar corporations, their presence on the digital platform creates entirely new issues. When something goes wrong, an injured person can argue that the service provider negligently screened goods or participants. However, the company can contend they are only an intermediary that serves to connect businesses and people and have no liability. Companies’ claims often reference the Communications Decency Act, which protects online content providers from content-related liability.

Zoning Problems

If someone lives in a place that’s zoned exclusively for residential dwellings, are they in violation of the law if they rent their condo or apartment in the short term? What about renting a single-family home for a weekend? Today’s zoning codes draw firm lines between different land uses and, depending on the location, do not always make accommodations for flexible uses. Cities’ demographics are rapidly changing, and populations are increasingly becoming single, young, and professional. These shifts have already had an effect on housing availability with the rise of micro-houses. This, combined with concerns over housing affordability and the change from a 9:00-5:00 work day to project or freelance-based jobs means the zoning aspect is in need of a fresh perspective.

Permitting and Licensing

While common sense may dictate that a “pop up” potluck event may not need a business license, one can’t really be sure. Many companies in the sharing economy are by-products of licensed and heavily regulated industries such as restaurants, hotels, and taxi services. It is often unclear whether a sharing model requires the same licenses and permits as a traditional operation.

The Final Word

The modification of traditional laws and legal practices is expected to be an ongoing effort for the foreseeable future. Some countries are further ahead than others in terms of supporting the new economy, which can best be seen as a return to a more primitive and basic way of performing transactions. Because of this, we can anticipate significant difficulties on individual, municipal, state, and federal levels. As this emerging economy grows and develops, the law must change along with it. To remain in compliance, participants should keep up to date with developments and protect themselves from unfair legal rulings. By considering the factors listed above, a buyer or seller in the share-based economy can get the services they need while staying on the right side of the law.

methods of company valuation

Methods of company valuation

Business valuation allows you to establish what your venture is worth. The process involves a number of key steps aimed at reaching an accurate valuation. Some of the key steps include adjusting financial statements, selecting appropriate methods of company valuation and applying the chosen techniques. Before gathering the relevant information, you need to determine reasons for the valuation.

Methods of company valuation

1. Asset Valuation

This method entails the valuation of your firm’s tangible and intangible assets. It places emphasis on property that produces cash flow. The value of the assets is determined by the market or book value minus the company’s total liabilities.

Some of the items considered in the valuation include real estate, equipment, patents, inventory, trademarks and more. The approach offers some degree of flexibility when it comes to the inclusion of assets and the determination of their value.

Asset valuation is usually conducted before selling or purchasing an asset. You can also perform the valuation prior to taking out insurance for an asset. The approach can be based on various factors, including transaction value, cash flow or comparable valuation metrics.

The value of your company may be greater than the value of recorded assets. Records may not incorporate proprietary solutions and internally developed products. Intangible assets can be difficult to valuate and they may come in the form of special services and products that help the firm to stand out.

2. Historical Earnings Valuation

The current value of your business is determined by its ability to capitalize earnings or cash flow and liquidate debts. The value of the business takes a knock when revenue is low. These factors can be used to determine the firm’s historical earnings valuation. In addition the entire valuation process can be regarded as an economic analysis exercise. The key inputs for the exercise come from your firm’s financial information.

To valuate historical earnings, you need the balance sheet and income statement. Incorporating business information covering between three and five years provides a practical way to create a more comprehensive view. However, you have to recast or adjust historical financial statements. This is aimed at establishing a link between income, operating expenses and the required business assets.

3. Discount Cash Flow Valuation

This valuation method provides an accurate assessment of your business’ potential future earnings. You use it to determine the venture’s attractiveness as an investment opportunity. The approach achieves the objective by discounting future net cash flow into present value estimates. Investors will find the opportunity attractive when the value of discount cash flow valuation is greater than the cost of the investment.

Several variations are applicable when assigning values to the discount rate and cash flows. The process involves performing complex calculations with the aim to establish the returns an investor would gain. You adjust the returns for the time value of funds, which guides by the assumption that money is worth more today than tomorrow. On the other hand, you assess the future value of investments using WACC as the discount rate.

4. Future Maintainable Earnings Valuation

The Future Maintainable Earnings (FME) methodology is a simplified version of the discounted cash flow. You can employ the FME when expecting the profits to remain stable for the foreseeable future. The method involves the evaluation of expenses, profits and sales covering at least the past three years. The result enables you to perform accurate forecasts and determine the value of your business today.

Earnings-based valuations require careful considerations of various key factors. These include the separation of assessments involving surplus or unrelated liabilities and assets. You should determine the capitalization rate, which matches an investor’s preferred rate of return. In addition, it should reflect future growth possibilities. The earnings estimates should cover historical and forecast operating results.

5. Relative Valuation

A relative valuation model provides a practical way to compare your company’s financial value against similar businesses. When you make comparisons based on business assets, the method helps you determine a reasonable asking price. The approach is an alternative to the absolute model, which establishes intrinsic value based future cash flow projections discounted to their present value.

Relative valuation achieves the objective using benchmarks and multiples. Identifying an average makes it easier to choose a benchmark. The average also enables you to confirm relative value.

Some of the relative valuation ratios used in the process include enterprise value, price to free cash flow, price-to-sales for retail, operating margin and price to cash flow for real estate. When it comes to methods of company valuation, the price-to-earnings (P/E) ratio is one of the most popular multiples. It entails a simple calculation. You simply divide the stock price by earnings per share.

When your firm has high price-to-earnings (P/E) ratio, this means it is trading more profitably than other companies in its sector. In contrast, people regard a firm with a low P/E as undervalued. You can implement this approach on any multiples with the aim to determine an entity’s relative market value.

Blockchain

What is Blockchain and How Will It Change the Global Economy?

Blockchain is the new buzzword among bankers in the know. For those who are still new to the concept, this article will help explain how the technology works and how it is likely to impact the future of banking. Read on to find out more.

What is Blockchain?

A Blockchain is an unchangeable, secure, open ledger system. Unlike a conventional bank, everyone on the ledger is able to view the chain’s transactions across its entire lifespan. It is essentially a database that is copied and shared across all of its main users.

When using a Blockchain system, each monetary transaction is represented as one “block” online. This block is then shared using the web with all relevant parties via a closed network. Everyone in the network then approves the transaction, at which point the block is added to the chain and the money is transferred from point A to point B with less hassle.

Although it was initially created to record Bitcoin and other cryptocurrency transactions, the technology has begun to catch on in a variety of other contexts as well. It is moving in the right direction to become more widely adopted by mainstream society in the near future.

What are the Advantages?

Allowing all users access to the centralized database comes with a variety of advantages. The most obvious of these is that everyone has access to the exact same records, which removes the need for reconciliations. It also offers a long-term transparent record for future use.

Distributed ledger technologies can also significantly reduce the amount of time required to settle transactions. Once all of the system’s initial flaws are addressed, it will also add a good deal of security to transactions. As the technology develops, it could result in revolutionary new business models as well.

What are the Flaws?

Blockchain technology is still in its infancy. In order to be universally adopted, the technology will have to be perfect to remove any possibility of external editing.

What Does the Future Look Like?

BlockchainIt is very likely that banks and other financial firms will be the first entities to adopt Blockchain technology. Currently, nine percent of financial services firms are already investing in related technologies. It is predicted that 36% of those not yet actively engaged in investing will be within the next three years.

According to the IDC, by 2020 $45 million will be spent by financial institutions on enabling Blockchain technologies. By the same year, 20% of global trade finance will likely incorporate distributed ledger technology. Financial institutions are not the only businesses that stand to gain from the use of distributed ledger technologies, though.

The PwC recently found that 11 percent of leisure and hospitality companies have already begun to invest in associated technologies. They are joined by 12% of healthcare companies, 7% of energy and mining companies, and 6% of automotive companies. Ultimately, the possibilities are endless.

New Regulations

Because the technology is so new, most governments haven’t yet established set rules to govern cryptocurrency. This allows startups to use Blockchain technology in innovative new ways. However, it also makes more risk-averse businesses less likely to begin implementing their use until more regulations are put into place to mitigate risks.

Some international organizations and national governmental agencies have begun the process of establishing regulations. Japan has already recognized Bitcoin as a legal currency, and various U.S. agencies have begun to establish policies on virtual currency and its use.

Why Invest?

Venture capitalists are already rushing to invest in distributed ledger technologies. Nearly $1.8 billion in investment funding has already entered the market. Forward-thinking investment firms and businesses would do well to consider doing the same.

There are a number of tech companies engaged in improving existing distributed ledger technologies. As they progress in their projects, they will be able to further improve transaction speed and scalability. Those interested in getting in on the ground floor would be well-advised to look into investing soon.

Skyrocketing Demand

The future of cryptocurrency is looking promising. There are few universities that offer relevant courses through their computer science programs, yet the need for developers continues to grow. Experienced engineers are currently commanding salaries of about $250,000 per year, and these numbers are likely to increase to meet rising demands.

The impact that cryptocurrency and distributed ledger technologies are likely to have on emerging markets is almost certain to be particularly stunning. Across the world, developing economies could stand to gain quite a bit from Bitcoin and other similar technologies. The global economy is likely to experience significant changes as a result.

A Few Parting Words

The need for skilled developers and investment capital is predicted to grow exponentially in coming years. Forward-thinking companies interested in investing in Blockchain technologies stand to gain quite a bit as they continue to impact the modern global economy. Find out more about fintech, cryptocurrency, and distributed ledger technologies online today to discover why.

social purpose business

Understanding a Social Purpose Business and Its Place in a Community

Employees are changing. They no longer wish to simply earn a paycheck. They want to change the world while doing so. For this reason, many people now opt to work for a Social Purpose Enterprise or Social Purpose Business, but what exactly is this?

Definition of a Social Purpose Business

What is a Social Purpose Business? This type of business is one in which the organization puts helping others above conventional business goals, such as improving the rate of return and boosting investor value. For example, a business that takes all after-tax profits and donates this money to one or more charitable causes is a Social Purpose Enterprise. Think of Paul Newman and his famous salad dressing. He doesn’t make money off of the sale of the products, choosing to donate them instead.

A Social Purpose Business focuses on an environmental or social mission and remains strategically committed to this mission. Their social purpose is a critical element of their overall business model and, as a result, will reflect on the organization’s commercial activity as well as influencing its capital allocation. This purpose is seen in every aspect of the organization, and the Social Purpose Business emphasizes its commitment to the mission in its marketing efforts.

Pitfalls and Problems

Running a Social Purpose Business may appear simple at first glance, yet nothing is further from the truth. The organization must determine how to make a profit while also working for a good cause. Should they operate as a for-profit business that earns money for a non-profit organization or rely on a non-profit to generate their income? This is one problem that must be tackled early on.

The first type is a Social Enterprise and focuses on finding the right balance between social, environmental and economic priorities. Doing so allows them to create blended value by providing a product or service. This may also be referred to as a business with a double or triple bottom line.

In contrast, the second type of business relies on a non-profit organization for income and you would call them a social purpose enterprise in most circles. A business in this category focuses on their social objective, simply using any monies brought in to achieve the goals they have established with regards to this objective. Revenues are of importance here, but the social goals are considered to be just as important.

Examples

A Habitat for Humanity ReStore is a Social Purpose Business that falls under the first category. The purpose of these retail locations is to generate income to provide homes for those in need. But they do so while maintaining the balance between bringing in the funds to accomplish this and providing a social benefit to the local community. The same is true of Salvation Army thrift stores that you can find in many local communities. Individuals supporting these retail locations find comfort in knowing their money will be going to a good cause.

In contrast, Goodwill stores are a social purpose enterprise. These stores help create jobs for individuals with disabilities, teaching them a valuable trade while providing goods for the community. Although they sell products as other retailers do, the ultimate goal is to assist those in need within the community. The retail locations simply provide them with a way to do so.

Regardless of whether a consumer makes use of a Social Purpose Business or social enterprise when they are obtaining a product or service, doing so helps the community. For this reason, many individuals now opt to support businesses of this type whenever possible. When they do so, everyone in the community wins.

The Arrival of Automation: Will a Robot Take Your Job?

The Arrival of Automation: Will a Robot Take Your Job?

The Arrival of Automation: Will a Robot Take Your Job?Job automation has arrived and it’s already saving manufacturing businesses a good deal of money. But with tech masterminds like Mark Zuckerberg and Elon Musk celebrating the rapid rise of artificial intelligence and automated labor, there’s reason for some workers to be worried about their jobs.

How Artificial Intelligence and Robots Save Money and Put Jobs in Jeopardy

How Artificial Intelligence and Robots Save Money

Human workers have a lot of needs. Sick days, paid holidays, minimum wage, government-mandated lunch breaks and other hallmarks of a humane employment situation can attract talented workers. But these perks aren’t necessarily good for the bottom line, especially when it comes to menial jobs with high turnover. Robot workers, on the other hand, don’t really need much other than some routine maintenance and the occasional big fix for an equipment malfunction or software bug.

It’s no surprise, then, that some businesses are bringing in robots to take the place of their low-level employees. With high rates of productivity and no need to worry about everyday HR concerns like salary and performance reviews, robots are proving a worthwhile investment. It’s an attractive prospect that has many business leaders wondering how they can replace some of their human laborers with computers, machines, and robotics that operate autonomously and perform the same work for less than a human employee.

As it stands now, we’re still in the early phases of the predicted robopocalypse of job automation, but if recent innovations are any indication, the robot job takeover could happen sooner rather than later. In particular, open-source artificial intelligence (AI) efforts such as Elon Musk’s OpenAI make the source code for AI programs available to anyone who wants to use it. This could make it much more efficient for developers to write code for computerized bots and other artificial intelligence, even at smaller companies and startups.

Which Jobs are at Risk?

Which Jobs are at Risk?

This all means that skilled and unskilled labor jobs, particularly those focused on tasks that involve repetitive gestures and the creation of identical items in an assembly-line fashion are at high-risk for robot replacement. Many laborers, especially those in automotive manufacturing, are already seeing large-scale job loss as manufacturing bots move onto the factory floor. Construction may be next as robots prove their worth in manufacturing and, in March 2017, the CEO of Taco Bell and KFC’s parent company indicated that he sees a big future for automated food prep in the fast food industry.

Even some menial office jobs, particularly those fulfilled by receptionists and assistants, are considered prime targets for automation. Paralegals, whose jobs are largely based on fact-finding, could also see themselves made obsolete by the right artificial intelligence (AI) program on their lawyer boss’ computer. But some higher-level jobs may also be at risk. The senior VP of digital marketing could feel the squeeze when marketing automation makes the human involvement in everything from social media posts to email blasts all but unnecessary. A manager may be needed to monitor feeds and other such oversight tasks, but the menial labor will likely be taken over by a specially coded computer program. And as more and more jobs get taken over by robots, recruiters, temp agency workers, HR professionals and others who deal with the human side of labor may also feel the squeeze.

However, there are plenty of jobs that aren’t considered to be vulnerable to job automation. For example, we aren’t at the point of letting the robots program or design themselves, so anyone who wants a secure career future may want to start learning how to program AI and engineer robotic machines. It’s highly likely that robots will be used to service and repair other robots, though, which means that a displaced factory worker who hopes to a robot mechanic isn’t exactly setting a realistic long-term career trajectory.

History and the Robot Uprising

History and the Robot Uprising

So will a robot take your job? If you’re a low-level worker in fast food, automotive manufacturing, bookkeeping, financial analysis or other industries in which menial, repetitive tasks are the name of the game, you have good reason to be worried. However, that doesn’t necessarily spell a future of widespread poverty. After all, if a significant percentage of wage earners are completely displaced by automation, the economic impact could do immense financial damage to the companies investing in robot workers in the first place. If no one can afford to buy cars, what’s the point of having robots build them in the first place? Job automation allows for high levels of productivity, but that productivity isn’t worth the investment if it isn’t actually driving revenue gains.

There’s also a question of the human touch. Job roles such as bank teller, financial advisor, and even movie star are said to be on the chopping block, but nuance and emotional awareness are notoriously difficult tasks for AI to master. Anyone who’s become frustrated by Alexa or Siri’s inability to understand pronunciation subtleties knows this firsthand. AI will likely get better at human-style interaction with time, but will that really mean that the benefits of social interaction itself become obsolete?

The point is that future jobs will likely look different than the jobs of the present day, but that doesn’t mean there won’t be any jobs for humans. This false assumption dates all the way back in the 16th century when Queen Elizabeth I of England denied a patent to a man who’d invented the automatic knitting machine. The queen was afraid that such a machine would make it impossible for poor women and girls to earn money with their knitting skills. Hundreds of years later, textile factory jobs ended up being a boon to many, especially after the introduction of safe labor practices and fair wage laws.

Even the 20th century had its fair share of unfounded hand wringing over the prospect of new technologies. Economists in the 1960s raised the alarm about computers taking jobs and destroying the economy, but they actually facilitated the creation of dozens of new career paths. Job automation may be the end of work as we know it, but likely not the end of work altogether. So, while robots in the future may take all or part of your job, historical context tells us that there will likely be another opportunity waiting for you in the brave new automated future. What will the future and technology hold? Self-driving cars, 100% person-free labor market with humanoid robots doing everything people once did? Though a robot takeover seems a little farfetched right now, who knows what the future skills of robots will bring.

impact investing

Impact Investing, What It Is and Why People Need to Be Aware of This Option

With the help of Impact Investing, individuals and businesses find they are able to boost their social impact bonds. However, many are still unfamiliar with this investment option and how it will fit into their overall financial portfolio. Furthermore, they aren’t aware of the benefits of impact investing. Now is the time to clear up any misconceptions people have to ensure those who wish to make use of this investment option can do so with ease.

What Is Impact Investing?

People want to know what is impact investing? Impact investing is a technique in which a person puts their money into a business that focuses on generating not only financial returns, but also is concerned about having a positive social and environmental impact on their community or world. Impact Investing dedicates itself to finding those businesses that will provide an attractive financial return alongside a concrete social return.

Who Makes Use of This Investing Technique?

Investors who want to play a role in this environmental or social movement choose to make use of Impact Investing to do so. They purposely allocate their capital to support companies of this type while expecting to obtain a return on the money they invest. They do so with the intent to engender a positive impact on the planet either socially or environmentally. At this time, Impact Investing is limited to a small group of investors, yet they are very socially minded and passionate with regard to their investments.

Others are beginning to take notice of impact investors. This includes groups such as insurance companies, endowments, foundations and pension funds. Individuals are also starting to make use of this option when they go to invest their money as they recognize doing so makes financial sense. They learn they can make money while also doing good in the world.

The Benefits and Drawbacks of Impact Investing

With the help of Impact Investing, businesses and individuals find they are able to accelerate justice, of concern to many. You can see higher environmental, social and governance standards often in companies that impact investors choose to put their money in, and this benefits the investor. A company looking to improve in these areas tends to witness lower capital costs, higher operational efficiency and stock prices. This benefits not only the investor, but the planet as well.

Impact Investing doesn’t tend to provide the same returns as traditional investing, however, when you consider tangible money. Nevertheless, impact investors need to consider the social impact of their investment to truly determine the value of this option. Those who do so tend to feel confident putting their money into a company committed to improving the world.

How Impact Investing Affects Businesses

Businesses must ensure any tax-exempt foundations they run are putting a minimum of five percent of their endowment each year on charitable purposes. By making use of Impact Investing they can ensure their dollars benefit the community and the planet as a whole. Furthermore, they are able to maximize the funds they are investing by choosing this option.

Many investors now emphasize social entrepreneurship when they talk about where they want to put their funds. Impact investing is a major part of this, and more people need to be aware this option is available. Fortunately, more financial advisors are offering this option to their clients and this is expected to continue in the future. People love to obtain a good return on investment when they are providing funds, but they want more now.

Impact investing allows them to obtain both in one investment when they choose wisely. This is one option every person and business should consider now and in the future.