con t e nt s
contents 3
Message from the editor/credits section
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Financial Freedom and Security
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‘Gold’ rush towards SME sector
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How energy efficient is your home?
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An Entrepreneur’s Life
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Your Money online
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Message from the Editor
Credits Publisher
I
take great pleasure in using this opportunity to thank you for taking time out to read through our premier issue of Your Money eZine, Jamaica’s first business and financial electronic magazine.
This eZine is for sophisticated individuals like yourself who take pride in being informed, and also use the information as an advantage to seize opportunities and garner the necessary tools for success in life.
eZines Limited Managing Director Tyrone Wilson Your Money Reporters Wayne Thorpe Andre Black
The term that you will get familiar with when reading our issues is eZine – an electronically produced magazine. Your Money is product #1, and it is an eZine that is committed to providing you with a wide variety of business and financial news.
Latoya Hutchinson
The Internet Telecommunications Union (ITU) in the United Kingdom has recently conducted a research, and has announced that 55% of Jamaicans are using the internet; that amounts to 1.5 million Jamaicans who are accessing the internet. This eZine recognizes your needs for constant e-Products that are Jamaican based and Your Money eZine is nothing short of that.
Cherryl Hanson Simpson
Your Money is a weekly product that has articles from some of the best reporters Jamaica has to offer. In each issue you will find investment news, corporate news, financial updates on stocks, bonds and foreign exchange, personal finance and more.
subscription@yourmoneyezine.com
Continue to be intrigued by our product and be interactive by sending your comments to editor@yourmoneyezine.com
Paul Mattis Columnist
Design and Layout Omar Phinn Subscription
Editorial editor@yourmoneyezine.com Your Money is a Product of eZines Limited, and is distributed weekly via e-mail. To subscribe FREE log on to www.yourmoneyezine.com today or email: subscription@yourmoneyezine.com
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Financial Freedom and Security
Managing Your Cash Flow In Hard Times Tanya Powell by Latoya Hutchinson
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igh food costs, increased gas prices and overwhelming utility bills are some of the harsh realities of today’s society. However, financial experts say that proper management of your cash flow will ensure your survival in economic hard times. Simply put, cash flow is the flow of cash in and out of your accounts. Hence your cash inflows would include your base salary and any other income, while cash outflows include your rent or mortgage, bill payments, living expenses and repayment of debts. Efficient cash flow management means your expenses never exceed whatever you are earning. On the road to a positive cash flow, wealth manager Tanya Powell advises that a financial goal plan should be created or other cases revisited. This plan outlines your specific financial goals and the course you will take to achieve them. A budget is an important aspect of your financial goal plan. “Considering the present state of the economy, you will have to be more consistent and focused than ever before with your budgeting,” says Powell. “Through your budget you may identify expenses that you can cut back on.”
Assistant Vice President, Private & Retail Client Services
for the long term, which includes such goals as retirement, financing your children’s or your schooling and buying that dream house.” Other Tips: Sourcing Outside Income Earn from your hobbies. Whether it’s selling your baked products or doing your friends’ hair at a minimum cost, it all amounts to one thing: an increased cash inflow. However, this extra cash should not be squandered, put some aside. Minimize your debts Be very frugal. Repaying debts, for example credit card debts, can result in a negative cash flow and ultimately financial insecurity. Use Other People’s Brains Develop your own board of directors, i.e. have around you persons who can accurately inform you on gaining financial freedom and security. Such persons include bankers, lawyers and wealth managers. Tanya Powell is the Assistant Vice President of Private & Retail Client Services at NCB Capital Markets Limited.
For instance, for the upcoming Christmas season Powell suggests that consumers take every step to lessen their spending. “So instead of expensive gifts and decorations, you could become creative and make them. And there’s no need to buy a lot of new clothes and such things,” she explains. Crucial too are your savings and investments. “As we are told, it’s not what you earn it’s how much you save. Don’t let fear or anxiety over the economic situation cause you to act unwisely by not continuing to save and invest,” says the wealth manager. Powell reveals that now is the best time for investors to garner good deals on stocks for their portfolio. “There are also mutual funds, which you can get in on for as low as $50; as well as global bonds. “We need not react badly in these times, it’s not the time to back down and cower. Look at the opportunities and take advantage,” she says, “Remember you still have to plan 4
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‘Gold’ Rush Towards SME Sector By Andre Black
effort to diversify its income stream from previously heavily weighted sources such as government securities, which he said has become less reliable. “The traditional banks have now realized that there is no more money to be made by putting your money in GOJ instruments,” said Chin-Mook. “Its like a gold mine; you can’t be looking to government anymore for safe security...So they have found a new source.
Bill Clarke President and CEO, Scotia Bank
After a long history of perceived neglect towards small and medium enterprises (SMEs), in recent years there has been a proliferation of funds being made available to the sector from Jamaican private and government institutions alike. However, questions still linger about the effectiveness of the mechanisms being used. Indeed, all the major financial institutions have aggressively pushed SME financing initiatives over the last few years in a bid to meet increasing demand from the growing sector and carve out a niche for themselves that can be a critical source of revenue. The National Commercial Bank (NCB) made one of the first major moves in 2004 when it launched the NCB SME Financial Services product and service packages, and since then has introduced many facilities geared towards the sector. At NCB’s year end 30 September 2007, the Retail Banking Division increased its profit contribution by 105 per cent, with the bank citing as a huge factor, a 28 per cent growth in its loan portfolio - boosted by an increase in SME accounts. In 2007, JN Small Business Loans Limited (JNSBL), a subsidiary of Jamaica National (JN), launched a loan facility, called Bizboost, where small and medium business operators can access from $300,000 to $3 million at an interest rate of 10 per cent per annum. Also, just within the past couple of months, two key players Scotiabank and First Global Bank - exercised major initiatives to keep their respective institutions competitive in the tightening SME market. Scotia launched a $400-million fund while First Global, with a loan facility of up to US$6 million from the InterAmerican Investment Corporation (IIC), will use the proceeds for medium- and long-term subloans to at least 36 SMEs. President of the Small Business Association Of Jamaica (SBAJ), Edward Chin-Mook, in an interview with Your Money, said that financial institutions have targeted the SME sector more in recent years in an 5
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“They have done their studies on the sector and like any prudent business sought to take advantage of it,” Chin-Mook continued. “Lets call a spade a spade; people are ‘eating a food’ off the sector.” Outgoing President and CEO of Scotia, Bill Clarke, at the launch the firm’s $400 million facility, while noting that the bank was devoted in helping to grow the SME sector, acknowledged its attractiveness for banking business as well. “We are pleased to announce the establishment of another development initiative... aimed at providing loans at concessionary rates to small and medium sized businesses for the purpose of starting up as well as for improvement of business operations for entities that are already in operation,” said Clarke. “The establishment of this program is in keeping with our current strategy of building sustainable market activity as we see small and medium businesses as the engine of growth for Jamaica in the 21st century as well as the only true way for our Bank to command market share in this sector.” However, while Chin-Mook said he is grateful of the banks’ loan provisions and is understanding of their propensity to structure rates moreso to maximize their own business, the SBAJ president is peeved at the government’s financing mechanism. While the government has drastically increased loan disbursements to small businesses over the last decade, Chin-Mook said that not much small businesspersons are benefiting from these lower interest loans because of the ineffective awareness techniques used by the government. “From as far back as 2000, I would say that there has been a move by the government to finance small business,” acknowledged Chin-Mook. “The sector is in need of assistance, not only in terms of financing but also in terms of management. “There is now a need by the government to get the funds out,” he continued. “The provisions have been made but they have been made in the quiet.” There is indeed data to support Chin-Mook’s assessment. Only $11million out of $2.3 billion in low-interest loans made available by the Government for the SME sector had been accessed by the sector between April and October. This includes $1 billion from the Development Bank of Jamaica, from which small businesses may access a maximum of $5 million from an approved financial institution at a rate of less than 10 per cent per annum. “There is a deficiency in the system,” argued Chin-Mook. “We would have thought that the new trade minister (Karl Samuda) would have ensured that the mechanism to release the money would be well oiled.” w w w. y o u r m o n e y e z i n e . c o m
How energy efficient is your home? by Paul Mattis
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ith the current global crisis looming, causing increase in food prices and energy costs, the need for homes to be energy-efficient has now become inevitable. The issue of high energy bills is on the minds of every Jamaican and the truth is, there are various options that can be explored to decrease your high energy bill. Your Money has compiled a list of energy conservation methods and also options for renewable energy that should be heavily considered in homes.
Ventilation
Another way is to improve the quality of air circulating around the home. Install ventilation that pumps up fresh air for maximum comfort. This will greatly improve the home’s energy efficiency. If the ventilation is not adequate, more energy and money will be required as the cooling and heating systems will be forced to work harder. Moreover, stagnant air accumulates moisture and other pollutants.
Insulation
Assess the insulation system’s condition in the different parts of the house. Make sure that the floors, and ceilings, as well as the exterior walls are properly insulated. Immediately fix any holes or cracks along windows, ceilings, doors, walls and light fixtures. Check also the plumbing system, the electrical outlets and other possible spots where air can leak out of or into the home.
Lighting
smaller number of clothes. This will prevent excess energy used in a fast spin intended for heavy loads. Use up a clothesline where clothes can be air-dried instead of using the dryer.
Solar Heating
Have solar panels fitted on the roof to capture the heat of the sun and create a solar water heating system. Energy can be received from indirect sunlight even during cloudy weather. This can efficiently replace the electricity or gas to be used in boiling water. This will not only benefit the environment, but will also greatly save fuel.
Carbon Savings
Take steps to reduce carbon footprints and save a lot of money. Some methods are quite easy to do. Turn off electrical appliances at night. Unplug the charger of the mobile phones. Recycle glasses, plastics and paper.
Solar Powered A/C
Another serious option to explore is solar powered air conditioning unit. The air-conditioning unit uses renewable solar power, which it stores in its battery unit. This product is offered by a local company: Green Energy Technologies Limited.
Other Energy Efficient Products to explore: • • • • •
Tankless Water Heaters, Instant Hot Water Heater Solar Ovens Natural Light Skylights Low Flow Shower Heads
Find ways to reduce use of lighting energy. Make use of dimmer switches and occupancy sensors. Replace incandescent bulbs with compact fluorescents, which save more energy.
Maximize Appliance Use Value
Shift the washing machine into ‘half load spin’ when washing 6
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An Entrepreneur’s Life Want to Make Money? No Problem!
Cherryl Hanson Simpson “Problems are only opportunities in work clothes.”Henry J. Kaiser I’ve often heard people complain that they wish they could earn more money or start their own business, but they don’t know which field to get involved in. Some would-be entrepreneurs sit by the wayside and never fulfill their business dreams because they think they don’t have any special skills to offer to the marketplace. The reality is that you don’t need to have any unique talents to start your own business. T. Harv Eker, bestselling author of Secrets of the Millionaire Mind, defines an entrepreneur as “someone who solves problems for people at a profit.” Therefore if you can first identify existing problems, and then figure out the solutions to get rid of those problems, then it won’t be hard for you to generate profitable business ideas. So what’s the easiest way to find problems that you can turn into money-making ideas? Start with yourself! Have you ever faced a difficulty and responded “why doesn’t somebody do so-and-so about it?” Maybe that ‘somebody’ should be you. If you are having difficulties in this area, other people may share the same sentiments. If you learn how to resolve your own problems, you will be better able to resolve other people issues. Years ago when I wanted to establish an artistic line of tourist wear, I was completely frustrated trying to find information that would help me to be successful in the business. I remember saying to myself “I wish there was one place that I could go to get all the information I need on making money.” Twelve years later, recognizing that this is a problem for many people, I have started to create the financial education service that I had envisioned.
Anthony Robbins, peak performance guru and author of Awaken the Giant Within, explains that people’s primary motivators are pleasure and pain. “Everything you and I do, we do either out of our need to avoid pain and our desire to gain pleasure,” Robbins confirms. Understanding the forces that motivate and control a consumer’s behaviour can be crucial in the success of any money-making venture. The avoidance of pain can actually be a stronger impetus than the search for pleasure; in fact most people will pay almost anything for products and services that can remove their painful problems. So, look for where the pain exists, and then figure out a marketable solution to offer to the public. Here are some obvious examples of businesses that were spawned out of problems: route taxis abound where there are no regular bus routes; people shop and run errands for elderly persons who can’t get around; and informal school buses help busy parents with their children’s transportation. If you solve a big enough problem for a lot of people, you can actually make a fortune. In the 1950’s, Bette Nesmith Graham, was a secretary with a huge problem. It was hard to correct typing mistakes with a pencil eraser on the new electric typewriters. Graham tried using white paint to remove errors, and it worked perfectly. She placed the paint in bottles and gave to other desperate secretaries. Soon, Graham was producing thousands of bottles of ‘Liquid Paper.’ In 1979, she sold her company to the Gillette Corporation for US$47.5 million.
What if you don’t have any pressing problems that can inspire money-making solutions?
So if you need a business idea, let your motto be, ‘No problem!’, and get creative at finding and marketing solutions.
Take a careful look at your surroundings- in your community, the workplace, at school or church. Can you identify any major issues which people constantly complain about? Can you pinpoint any situations where the presence of something or the lack of something else causes people to feel severe discomfort or experience inconvenience?
© 2008 Cherryl Hanson Simpson Cherryl is a financial columnist, consultant and coach. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Send questions and comments to info@financiallyfreenetwork.com. Please add this address to your email address book in order to ensure you receive a response.
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Your Money Online Better Value Says Claro Newly transformed mobile operator Claro promises better value to the Jamaican public. “The market was hungry for value and we are here to give it,” says Commercial Director Noel Esty. The company launched its new brand last week, where it revealed some of the products and services it will be offering in the telecommunications industry. Operating with 3G technology, Claro pledges to bring a wider range of more advanced services to the market. Such services include video call conferencing and web browsing. Read More
Be Successful in Starting a Franchise Entrepreneurship is driven by creative minds. Some people can develop bright ideas which lead to the next great invention; others can build on already established reputations. Since not all us necessarily have the “creative gene”, coming up with a new business concept might be challenging. Nevertheless, you have ingenious ideas that you want to introduce to the world; something you know people will love and appreciate. Well, why not put those ideas into a franchise? Read More
A Viable Backup Plan Should Your Business Fail With the high risk associated with starting a company, it is only wise that entrepreneurs take the time to formulate a viable backup plan in the case that their ventures fall through. According to Vice President of the Young Entrepreneurs Association of Jamaica, and CEO of Coates Logistics Limited, Samuel G. Coates Snr., there are three main factors that should be included in a business back up plan: education, versatility and expertise. Read More
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