Ingram Heisman

Market Failures And Business Cycles Part 2

Continued from Part 1 ….

Something reverse can happen which would be even more damaging than the just discussed case. Instead of Consumption growing at a faster rate than Savings, it might so happen that Savings and Investment grow at a much faster rate than Consumption. For example, prior to Great Depression, the importance of aggregate demand as explained by Keynes was not understood. As a result government policies normally favored huge Investments and were not geared towards propelling aggregate demand. It is well documented that one of the reasons for the Great Depression was US government policies which led to uneven distribution of income heavily in favor of the rich and the consequent depletion of the buying power of the households. So Great depression could have easily resulted from Investment/Savings growing at a much faster rate than Consumption. Huge Investment/Savings would mean that huge surpluses are realized by the producers of the Consumption sector. This would prompt them to invest in an even bigger way in plant and machinery and this huge Investment/surplus pattern continues for a few years. After a few years, we have huge capacities with insufficient Consumption or buying power!

The capacities of production rise to an extent where the producers would not really be interested in investing their surpluses as they already have huge unutilized capacities much in excess of the buying power of the households. As a result Savings are not invested i.e. Investment lags behind Savings. Money is hoarded, the circular flow of income in the economy stops and the economy gets paralyzed. Demand gets constricted which in turn constricts Supply. These constrictions worsen the situation even more because, on account of drop in production, the percentage of unutilized capacities increases even more than before which makes Investment in new capacities even more unattractive further increasing the hoarded money. The economy gets involved in a vicious downward spiral that can dramatically reduce incomes and severely aggravate unemployment. Ultimately after a few years, some huge Investment opportunity prompts entrepreneurs to start investing all of the Savings and the economy restarts on the expansionary path. Or it can so happen that the huge excess capacities get destroyed on account of lack of demand  for example, some new technology makes plants with older technology unsuitable to the new needs and such plants and factories become useless. This way excess capacity is weeded out making the economy conducive for Investment and growth. I believe that most business cycles in US and Europe prior to 1930s occurred in this way, they were all mostly Investment propelled. I would call those cycles  the Investment led Business cycles.

How can stagflations occur? During the Consumption led cycles, after several years of growth, Consumption eats away into Savings and surpluses realized would fall short of expectations for the producers of Consumption sector. Savings are low and a correction is required by cutting Consumption and increasing the Savings. The extent of correction defines the strength of the next boom. If the correction is big and Savings are piled up in a large manner during the downturn, then, at the beginning of the next boom, it gives the chance for Consumption to nibble away at Savings slowly and steadily for a large number of years  booms can last very long. If the correction is very small, if Savings are not too large at the beginning of the boom, the boom is then nipped in the bud itself. As there are no large Savings made, as soon as Consumption tries to nibble away Savings, Savings would immediately fall below the danger mark and the surpluses expected by the Consumption sector are not realized and a recession would start as immediately as the boom starts. In such cases, the booms might not last for more than one or two years. Such cases of insufficient corrections can occur on account of government intervention. Government tries to arrest the downward slide by trying to propel the aggregate demand using expansionary policies such as cutting down interest rates or indulging in deficit spending. Governments intention in doing so would be to arrest the downward slide and decrease unemployment. However the effect of the government intervention would be that, economy starts expanding even before the Consumption is cut and Savings are increased to the required extent. As the economy starts expanding, Consumption tries to eat away at Savings and this immediately brings the Savings below the danger level and an immediate onset of recession. More workers are fired and a downward slide starts once again. Once again the government intervenes and tries to arrest the slide and once again the same thing would repeat itself and more workers are fired. Unemployment keeps soaring. Ultimately the producers realize that low surpluses are here to stay along with expansion.

Apart from low surpluses there is the problem of rising interest rates. As the economy tries to expand, there would be good amount of Investment demand. However as Savings are low and Investment demand is high, there is a huge demand for the limited funds available causing the interest rates to rise vertically. Government borrowing and deficit spending in order to boost the economy eats into the already low Savings and aggravates the situation even further. The situation mimics that of a boom time when both short term and long term interest rates are very high. Abnormally high interest rates lead to cost-led inflation. Very high interest rates coupled with low surpluses make Investment as well as production expansion unattractive to the producers of the Consumption sector. They start pocketing their profits without either investing or expanding production and the economy starts stagnating without growth. Under normal circumstances, pocketing of profits would lead to hoarding of money and paralyze the economy on account of stoppage in the circulation of money. However in this case, on account of governments expansionary policies as well as cost-led inflation, capitalists do not hoard the money as money would lose its value on account of inflation. They start spending the pocketed profits and the circulation of money is not disrupted.

However the demand does not increase despite the lack of hoarding  why? What should have been saved and invested is now being spent directly by the capitalists. The income that would have reached the hands of a hundred Investment workers is now in the hands of a single capitalist. As a result, where hundred toothpastes would have been purchased by hundred Investment workers, only one toothpaste is purchased by the solitary capitalist! As a result the demand for goods suffers despite the fact that money is not being hoarded. Capitalists are high earners; they consume a small portion of their income and start spending the rest of their income on speculation in real estate and shares. Shares and lands are bought and re-bought at higher and higher rates leading to a speculative bubble and soaring inflation. Housing becomes very costly and the workers find their buying power reduced as a large portion of their incomes goes in providing housing for themselves. Workers then start demanding for higher wages and periodic wage hike agreements become part of the wage agreements making inflation a relatively permanent phenomenon. Unlike what some economists say about the unreasonability of wage hike demands by labor unions, the wage hike demands of workers were actually beneficial to the stagflationary economies of the 70s. The hike demands of workers actually act as some sort of a small check on the speculation of capitalists  instead of wild speculation, some money in the hands of the capitalists gets diverted towards wage hikes. Overall, stagnation and inflation co-exist together. This is how you get stagflation.

There was a continuous boom for two decades in US and other nations during the 80s and 90s. How could the booms last so long during this period? The booms during this period were Investment led. Huge amounts of Investments in IT infrastructure propelled these booms. However these huge Investments in IT are completely different from those that propelled the Investment led booms prior to 1930s. The huge Investments prior to 1930s led to piling up of new capacities in a big way. This gave in to the chance of there being over-Investment on account of huge unutilized capacities which ultimately led to further Investment being unattractive thereby resulting in Investment lagging behind Savings. However the Investment of the 80s and 90s was not that way. Investment in IT technology did not increase the plant capacities. For example, more cars cannot be produced just because car companies invest huge sums in IT. Therefore depressions of the type that occurred prior to 1930s are ruled out and the boom lasts as long as the IT spending lasts. Why couldnt Consumption eat into Savings during this period? On account of the fear of being replaced by computers, the bargaining power of the workers reduced dramatically upon which wage led and the subsequent cost led inflations were completely absent. Therefore producers could save their surpluses and invest them without having to spend them on increasing costs. Also the prime reason for Investment in IT being cost cutting, cost cutting ensured that Consumption would never eat into Savings. This way neither Consumption would eat into Savings nor would Savings/Investment lead to excess capacities. Both types of downturns are ruled out. Booms would last as long as the IT spending would last. This is how booms lasted so long during the 80s and the 90s leading to a virtual absence of business cycles.

That roughly sums up two and half centuries of Business Cycles!

A small note before closing out. From the capitalists point of view, it would be great if the households immediately spend all that they earn on Consumption  sales would get boosted. So household savings make a dent or a hole in Consumption. This hole is then filled by the immediate Investment of those household Savings. So the phenomenon of investing the household Savings is like digging a hole and filling it up. Therefore household Savings do not affect the financial position of an economy as much as the Capitalist Savings. A shrinkage in household Savings would not directly affect the margins of the firms. So just make a mental note that the above discussion on Savings had more to do with Capitalist Savings and less to do with Household Savings.

 2005 Thotakura R,US registration:TXU 1-256-191

Market Failures And Business Cycles Part 1

The following is the most comprehensive ever explanation to the most mysterious phenomenon of Capitalism  the Business Cycles. In order to ensure that the article can be read by any well educated reader, I have minimized the economics jargon and have added a short and simple introduction to the structure of the economy. Each and every one of us would be interested to know as to why we cannot have a paradise on earth. Why is it that we are often besieged by such painful downslides of economic activity such as Great Depression or the nerve wracking periods such as Stagflations? Why cant we all be always happy with hundred percent employment all the time, with each and every one of us employed? The following article provides simple and complete Business Cycle explanations to Depressions before 1930s, Recessions after 1940s, Stagflations of 70s and Continuous Booms of 80s and 90s.

The income that we earn is normally divided into two portions, Consumption and Savings. We normally consume a large portion of the income we earn for our day to day necessities as well as irregular buys. Regular necessities include food, clothing, toothpastes, soaps and other daily necessities. Irregular buys include bikes, cars, books, movies, music and so on. After we spend most of our incomes on Consumption, we save a small portion of our income and invest it in shares, bonds, fixed deposits and other long term investments.

In direct relation to our above mentioned activity, our economy is divided into two sectors  Consumption sector and Investment sector. If we exclude the government spending, Consumption sector constitutes roughly around 80% of the size of economy. It includes everything that we buy  food, clothing, cars, bikes, TVs and other durable goods, books  every thing. And around 20 percent of the size our economy is constituted by the Investment sector. Investment sector mainly includes activities such as installing new plants and capacities, and housing. A three sector model would also include government spending as well. However free markets have more to do with these sectors and less to do with Government Spending, so let us exclude governemnt spending. The figures given above are only approximate and can vary sizeably from economy to economy.

So how are profits made by the Consumption sector manufacturers? In any economy, Consumption sector always produces in excess of its requirements  it produces surplus. Consumption sector capitalists as well as households also save a certain portion of their income. Investors invest these Savings in the Investment sector. So these Savings turn into the earnings of the Investment sector capitalists and workers. The workers and capitalists of the Investment sector then spend their earnings on the consumption goods. So basically the surplus production of the Consumption sector is consumed by the workers and capitalists of the Investment sector. Therefore in a circular flow monetary economy, the income of the Investment sector becomes the profit or surplus of the Consumption sector firms. There is a small assumption that is made here on which I shall allude to at the end of the article.

So there are two things that we have to note here. First the size of the investment sector decides on the size of the profits of the Consumption sector. If there are huge Investments made, the Consumption sector capitalists make huge surpluses or profits and if the size of the Investment sector is on the lower side, the Consumption sector capitalists would make lower surpluses or profits. Also all of the Savings made should always be invested. If Savings are made but are not invested, then it would lead to a lower size of Investments and lower profits. Insufficient profits would force the producers to cut down on their production levels and this would directly lead to rising unemployment and recession! It is a long recognized economic thought that Savings made should be compulsorily invested fully so that the economy can be in equilibrium. If the Savings made are not invested fully, it can lead to disequilibrium between Supply and Demand and can lead to piling up of unsold stocks of inventories and a subsequent recession.

With the above short introduction to the structure of our economy, we are ready for a small journey into the fascinating world of Business Cycles.

Our economies are rarely ever static. They keep growing in size every year. Now in a growing economy Consumption also grows. Year on year more cars are purchased, more televisions are bought, more computers are installed and so on. It is natural that when Consumption grows by say 6%, the suppliers would expect their surplus also to grow by 6% because surplus, which is called profit in the business parlance, is obviously measured in percentage terms. However the surplus production has to be consumed by the workers of the Investment sector which obviously means that even Investment would have to grow by 6%. However this would mean that Savings, which is the fund for Investment, would also have to grow by 6%. What would happen if Consumption grows by 6% but Investment or Savings do not grow by an equivalent percentage? To the extent of the inequality, producers surplus would remain unsold and the economy would be in disequilibrium. So the equilibrium condition of the economy would be

Periodic Growth percentage of Consumption = Periodic growth percentage of Investment = Periodic growth percentage of Savings.

Suppose during a particular period, there was a perfect equilibrium in which Consumption was C, Investment was I and Savings was S. Suppose during the next financial period C grows by a certain X percentage points. Then S and I would also have to grow by the same X percentage points. Suppose either I or S does not grow by X percentage points, the economy would be in disequilibrium even if Investment is equal to Savings!

Here in lies a blue print for different types of Business Cycles.

A normal characteristic of any recession is the presence of huge un-invested Savings. Investors hoard money without investing it because of lack of investor confidence. At the trough or the lowest point in a business cycle, Consumption is relatively low and Savings are relatively high, especially un-invested Savings. Then as economic activity picks up, all of the Savings are invested and the producers of the Consumption sector would be able to realize their expected surpluses. The size of Investment sector is equal to the surplus of the Consumption sector. Since Savings are high and are fully invested, the producers of the Consumption sector would be able to realize huge surpluses. Economic activity picks up a roaring speed.

As economic activity picks up, there starts a battle amongst the producers for market shares. For example, each car manufacturer wants to sell as many cars as possible. He would not think  let me produce less cars now, let me save and invest more for later. So as the battle for market share picks up, Consumption accelerates at the expense of Savings i.e. Consumption grows at a faster rate than Savings. Our above mentioned condition tells us that for equilibrium to exist, Consumption and Savings have to grow at an equal pace. So if Consumption grows at a faster pace than Savings, would this lead to disequilibrium immediately? This may not immediately lead to disequilibrium because producers would obviously not keep expecting to earn abnormally high profits the way they earned in the initial stages of the boom. Their expectations are also geared towards comparatively lower profits or what is called as normal profits as the boom progresses and therefore lower growth rate in Savings vis–vis Consumption would not immediately damage their expectations of surplus. This way the boom progresses from the trough to the peak for a few years.

After a few years of growth of Consumption at a faster rate than Savings, the percentage of Savings in the income would drop so low that Savings are not sufficient to meet the expectations of surplus of the producers of the Consumption sector. Even if Savings are fully invested, this does not generate the surplus as expected by the Consumption sector because of the lower size of investment and would lead to disequilibrium. Producers see their unsold inventory stock piles rise and their profits dwindle. The situation needs correction. Consumption needs to be cut and Savings need to be raised. As they are not able to sell their goods, the producers of Consumption sector would be more than willing to do so. They cut their production and increase their Savings.

However the required correction might not materialize! The very objective of capitalist economies is Consumption. If Consumption is on the decline, we cannot expect Investment to increase. We cannot have fewer bikes sold as compared to previous year and at the same time have much higher Investment in the bike sector as compared to the previous year. A cut in Consumption might increase Savings but would not raise Investment. Investment follows the path of Consumption and it itself starts in the downward trend. As a result the increased Savings are not invested and the disequilibrium takes on a relatively permanent position and we have a recession! There are no automatic forces to ensure immediate correction. What started with a cut in Consumption to increase Savings leads to a fall in Investment. This drop in Investment leads to a further depletion of aggregate demand which then prompts the producers to cut their production levels even further. Consumption declines even further and the spiral continues until the economy settles at a low output with a lot of unemployment. This sort of downward spirals were recognized by the eminent British economist John Maynard Keynes. Eventually, after a few years of low output, some invention or some enthusiastic entrepreneurs who are attracted by prevalent low interest rates might trigger Investment to reverse its downward path and start the process of expansion all over again. I believe that most recessions in US and Europe after 1940s occurred in this way. I would call these cycles  the Consumption led Business Cycles.

Continue to Part 2 …

 2005 Thotakura R,US registration:TXU 1-256-191

How to Watch the SuperBowl

On February 4th hundreds of thousands of Football fans will be gathering around their televisions to view the SuperBowl, but what are the essentials to maximizing your SuperBowl watching experience

The teams may not have been decided yet, but it is not like it really matters, no matter who plays most eyes will be glued to the game. With the exception of the fans of those teams that are playing most people who watch the SuperBowl are just hoping for a good game.

One thing people like to do to make the game more interesting is an office football pool. This is when everyone throws money into a pot and you get a box latter numbers are randomly put in each box, then at the end of each quarter the score is checked and whoever is on the box that corresponds with the current score wins some money, and who ever has the score at the end of the game gets the majority of the money.

Another thing the more hardcore gamblers like to do is to place a bet at one of the many online sportsbooks. If this is hat you are into I recommend you go to several sportsbooks before placing your bets, different sites will offer different odds. Make sure to only place your bets on the SuperBowl with the bookie who offers you the best odds.

Besides betting on the game there are many things you can do to make the game more enjoyable.

The people you watch the game with effect the enjoy ability of the game. If some of the people you watch the SuperBowl with do not like football or understand the game they are not going to get into the game and they may want to talk and be a disturbance to those who want to watch the game undisturbed.

The 2 most important things you need to watch the SuperBowl are food and beverages. SuperBowl partys can be very wild and result in many people calling out of work the next day, because of being hung over or sick from bad food.

Make sure whatever types of foods you offer the foods were not prepared in a rush. If you are planning to order food to be delivered you may want to rethink your plan. One of the busiest nights of the year for a take out restaurant is SuperBowl Sunday, and in a rush to get all the orders delivered on time sometimes food can be undercooked, so you may want to either keep it simple like pizza or make your own food.

Beverages can be a bigger problem then the food. Most men will usually drink some beer while watching the game, but unless each person brings their own beer you risk running into someone who does not like the selection you have provided, also because the game is on a Sunday people may want to stay sober, because of work the next day. So make sure to have a good selection of beer, hard liquor and non alcoholic soft drinks. You can always ask you friends when you invite them for the game what they like to drink, then assuming no one picks something so out of the ordinary you should be able to find an acceptable mix of drinks for everyone.

As for Snacks I recommend a large selection or the basics chips, pretzels and maybe popcorn or even peanuts.

Hopefully this will help you to have a better time watching the SuperBowl, and throw a great party at the same time.

Broken Heart Remedy – Is There Such A Thing

Broken Heart Remedy Is There Such A Thing

A broken heart is one of the most painful feelings a person will experience, the sadness that accompanies a break up is incredibly intense. The more love that you felt for your ex partner, the more your heart will suffer. Is there a broken heart remedy?

Unfortunately there is no instant cure or remedy for a broken heart but that doesn’t mean that you are destined to feel that agonizing hurt for the rest of your life. Although you will feel alone, sad and depressed for a while, there are some steps that you can take to help overcome your sadness.

Recovery from a broken heart will take time but these steps will help you to deal with the hurt that you are feeling and speed up the recovery process. While they are not an instant remedy for your poor, crushed heart, they will help you get through this difficult period.

1. Take control of your emotions.

It is easy to lose control of your emotions when you are in such a desperately sad state following a relationship break up. You will feel such a big range of emotions including intense sadness, incredible anger and rejection. You will sometimes be angry at yourself and sometimes feel anger toward your ex. If you can’t take control of your emotions then you will find it difficult to move on.

A roller coaster of emotions is perfectly normal after a break up and there is nothing wrong with experiencing such a big range of different emotions, just as long as those emotions don’t take over your life. If you are feeling sad then let the emotions out, have a good cry and then move on. If you are feeling angry then let those emotions out too, go punch a punching bag or go down the beach and scream your lungs out and then move on. If you let your emotions continue to bring you down and can’t get past them then you might find yourself falling in the depression and that will be very difficult to climb back out of.

2. Accept that The Relationship is Over

Everything in life happens for a reason and if you can look at your break up with this attitude then you are one step closer to mending your broken heart. Even though you might feel that your ex partner is “the one” for you, perhaps he isn’t. Perhaps this relationship was never destined to work. If this person isn’t “the one” then as long as you are with him you are prohibited from finding Mr Right. Maybe this break up happened for a reason and happened so that you could change paths in your life journey and find the person that you really are meant to be with. You will find happiness again and as soon as you accept that this relationship is over the sooner you can open yourself up to finding happiness.

3. Move On With Your Life

Sometimes you just need to let go and move on. The ending of this relationship is not the end for the world; it is just the end of one chapter in your life journey. When it is obvious that this relationship wasn’t meant to be, then you can let go and move on with your life.

Although breaking up from a relationship is incredibly sad just try to remember that you have your whole life ahead of you and many more fantastic experiences to have. There is no magic cure to heal a broken heart but if you consider these three steps and try to follow them you can start to recovery from the heartache and move on with your life. Learn from the experiences you shared with this person and become a stronger person from them. It’s time to move on and enjoy the rest of your life.

The Need For After School Activities

When children are literally up to their gills with the learning and sport activities in school, it may seem superfluous to enroll them for after school activities. In spite of this, after school programs are sprouting up in large numbers and most of these are booked full. This shows that there is a real need for after school activities.

The unavailability of parental supervision is the leading cause for the surge in after school programs. It is seen that many children spend about 20-25 hours a week unsupervised and alone at home. And as the saying goes, “An idle mind is a devil’s workshop”. Children who are left alone to contend with too much free time invariably fall into the wrong company. Drug abuse, alcohol, tobacco and crime come knocking at their doors sooner rather than later. Parents enroll children to various after school programs to keep them occupied in a productive manner. This way, the kids are free to enjoy themselves in a supervised activity.

Crime is considered to be at its peak during the after school hours, between 3- 4 p.m. During such a time, children need protection. Getting the children together under one roof and encouraging them to participate in a group activity is protection enough. It diverts the children from ennui too.

Obesity is a matter of growing concern in this country. It is noticed that more and more children are becoming couch potatoes. After school, many of them relax on the sofa with packets of chips, cool drinks or chocolates while they watch T.V. 30 % of the kids below the age of 19 are considered overweight, and about 15% of these are obese. An after school program ensures that the child shakes off his lethargy and keeps himself busy. This also helps to reduce the child’s fascination for T.V and computer games.

After school activities that promote social awareness develop the individual’s sense of social responsibility. It is seen that these sorts of programs not only keep kids out of trouble, but also help to produce responsible citizens. To that extent, they are valuable building blocks in a child’s personality.

Times are changing and parents want their children to excel in academics as well as in other activities. This may be a reflection of the parent’s unfulfilled desire to excel – a remnant from his own childhood. Whatever the reason, parents today encourage their children to enroll themselves in various programs and develop the various facets of their individuality. Children too seem to be comfortable learning many things at the same time, and gain satisfaction from this.

Summer Vacations: Why Your Family Should Take One

Each year, a large number of families make the decision to take a summer vacation. Despite the fact that a large number of individuals do vacation during the summer months, there are even more families that do not. Which type of family are you?

There are a number of reasons why a particular family may be unable to take a family vacation. One of the most common reasons involves the cost. Unfortunately, many individuals mistakenly believe that a vacation has to be an extravagant adventure. It doesnt matter whether you travel to the closest amusement park, camp overnight at a state park, or travel around the world, each can be considered a summer vacation.

In addition to the cost of a vacation, a large number of families are unable to take a family vacation due to their busy schedules. Summer vacations are popular because they are often the only time that a family can take a break from their daily activities. If you are able to set aside time, whether it be three days or three weeks, you are encouraged to schedule a summer vacation with your family. Doing so has an unlimited number of benefits.

Perhaps, the greatest benefit of scheduling a summer vacation with your family is the amount of time that you will be able to spend together. In this day in age, many families are rarely able to spend time together. Long work hours, homework, and busy sports schedules often prevent a family from enjoying dinner or other fun activities together. In some cases, a summer vacation is the only way that a family can spend uninterrupted time together.

The relaxation that a summer vacation will provide your family with is another benefit of scheduling one. Today, children must operate and function differently than they had to in the past. School age children are often bombarded with large amounts of homework, on a daily basis. This homework, along with active sport schedules and pressure to be the best, can be difficult for children to handle. A summer vacation may provide them with the rest and relaxation that they need and deserve.

In addition to your children receiving relaxation, it is quite possible that you and your spouse could as well. It is true that children have a lot of pressure placed on them, but so do parents. Scheduling a summer vacation with your family will give you the opportunity to forget about work related issues and home cleaning. These are some of the problems and issues that only a summer vacation could cure.

If you are interested in scheduling a summer vacation, you and your family are encouraged to pick a destination together. Selecting a summer vacation destination as a family will enable everyone to have access to fun filled activities. In addition to selecting the perfect family vacation, your children may experience a feeling of importance. This feeling of importance if often generated from having an input on a large decision, such as your next summer vacation destination.

Hosting A Dinner Party Hire A Personal Chef

Think only the rich and famous have the privilege of having a personal chef wait on their every craving or gourmet pleasure? Think again.

Personal chefs are now helping couples and families to present fabulous home cooked dinners to their guests. And it’s not as expensive as you think!

Why hire a personal chef?

A personal chef will bring the food, create a nutritious and balanced meal, figure out the servings needed (so you don’t need to deal with leftovers) and most of all give you the freedom to focus on other aspects of entertaining while still providing the best food for your guests.

Are you hosting a business lunch? An intimate wedding reception? Or even an intimate dinner for two that just HAS to be the best? A personal chef can handle any order. You can usually choose from a selection of courses they provide or arrange for a customized menu.

How much does it cost?

Prices will vary but you can expect a weeks worth of meals (containers, food and cooking included) to be about $350 for a family of 4 (20 meals of entrees and side dishes) or $175 for a couple (10 meals of entrees and side dishes).

Some services will prepare all the meals at once while others will deliver or prepare the meal in your home throughout the week.

How do I find a personal chef?

Finding a chef is easy by using the USPCA (United States Personal Chef Association – http://www.uspca.com) or the CPCA (Canadian Personal Chef Alliance – http://www.cpcalliance.com). Here you will find information on personal chefs as well as a directory of members in your area.

Will they do meals just for my family?

Personal chefs are more than just a catering service. For busy professionals who are looking for quality meals and more time with their family, a personal chef will prepare several entrees and side dishes, store them and clean the kitchen. For the rest of the week all you have to do is take them out of the fridge or freezer and reheat to enjoy gourmet meals all week. For families who turn to fast foods and restaurants the cost may actually be less than what they are currently paying.

Some personal chefs also can be booked for private or group cooking lessons. Invite a group of your friends to learn the art of creating delectable pasties or sumptuous seafood from an expert!

While not everyone needs the daily services of a personal chef you may wish to treat yourself to the luxury of a fabulous dinner at home – no cooking, cleaning or experience necessary!

How to Maintain your Mental Health

In recent years people have realized the importance of proper diet and exercise, and recent surveys show that over the last 20 years people are eating better and working out more often, resulting in people living longer, but people are still lacking in their understanding that their mental well being is just as important as their physical health.

Today most people get on average 4 to 6 hours of exercise every day, and make sure that everything they put in their mouths is not filled with sugars or preservatives, but they pay no attention to their mental health, no vacations, not even the occasional long weekend, 60 hour weeks, taking work home with them and even working weekends. All of this for hopes of one day getting that big promotion. What good will it do you when your brain overloads and you have a breakdown in the office.

In the end your physical health will suffer no matter how well you eat and how often you exercise. You will wind up with high blood pressure, stress and tension all of which raises the chances of you having a stroke or heart attack.

Business Owner’s Essentials – The 5 Biggest Challenges for Today’s Business Owner

Some of these challenges have been around since business began and others are new ones that are being faced as technology and the marketplace evolves. As a business owner, you need to be sure that you are handling each of these effectively and looking out for where they might destroy your business.

1. Cashflow Management

This is the number one essential for all businesses, no matter what stage they are at. Even the most successful businesses can fail if they take their eye off the ball on cash. Your cashflow is the difference between how fast money comes into your business from your customers and how fast you pay it out to your staff, your suppliers and the tax man.

Many business owners dont realise that their cashflow can be at most risk when they are growing fast or taking on big orders. This happens because, in most businesses, products and raw materials have to be bought and paid for before they can be provided to customers and billed. This is also similar for services, where your employees and contractors have to be paid at the end of the month but the client may not be billed until the following month or when a job is completed. And they may not pay you until some time after that.

In periods of high growth your costs can go up and out of the door long before the cash from the increased sales comes in. And suddenly you find you have a cash crisis on your hands.

2. Your staff

Your employees can make or break your business. When you choose the right ones they can massively add to the value of your business. When you get the wrong ones they can be a drain on your time, your money and they can hold back your business.

The usual mistakes made include recruiting people who are not as smart as you so that they make you look good; Hiring too fast and firing too slowly; Not investing in training and development for your staff; Not listening to what theyre telling you; Not taking up proper references when recruiting; Not adopting good, consistent and fair HR policies within the company.

Many business owners find that employee issues are the number one drain on their time and attention. And often the issues don’t get resolved and lead to litigation and expensive legal bills.

The first key is to recruit high quality people, who are smarter than you, who are motivated to build and grow your business and who come with a good track record. Also, always take up references and carefully check CVs or Resums for any gaps or inconsistencies.

The next key is to treat your staff fairly and reward them for good work. Whatever you measure and reward will get done more, so consider this carefully. Create clear and consistent policies for employee development and training and make sure you allow good time for one-to-one reviews where the discussion is allowed to be open and frank.

And above all, keep the lines of communication open and clear and trust them.

3. Getting Noticed in a Crowded Market

You may have a great product or service but unless your potential customers know what you provide youll never have a great business. You need to get out into the market and deliver your message to the people you want as customers.

The challenge comes with the fact that today people receive an average of 3,000 marketing messages a day. And theyve become immune to many of them. Your job is to be able to cut through all those messages and stand out enough to get noticed by your customer.

The best way to achieve this is by focussing on a niche. This way you can target your marketing with a laser focus to match your desired customers directly. And when you specifically target your prospects with a message that is tailored to them and their needs, theyre far more likely to take notice and listen.

The standard reaction to this is to worry that by focussing on one niche you could miss out on other customers. The reality is that the scatter gun approach that throws your message out to anyone and everyone is extremely hit and miss in its results. And it rarely works now because the message becomes so generic that no-one believes it applies to them. Remember, you can always select another niche once youve worked the first one. So you can eventually get to all of your potential market in a far more effective and targeted way.

4. Poor planning

Its said that when you dont know where youre going, any road will get you there. This means that without a clear plan and objective you can get distracted and diverted all over the place and never achieve what you really want for your business.

When businesses fail to plan they find themselves losing money, losing staff, losing momentum, losing customers and losing business.

Without a plan, you wont know whether youre on the right track and youll have no guide as to whether you need to go faster or approach the business in a different way. Stumbling through simply doesnt cut it for a good business.

Making plans allows you to prepare for more eventualities. It allows you to foresee potential problems and avoid crises. It actually gives you more flexibility because you can flex around your plan and revise it as you go. It also makes it easier to make decisions because you have something to judge the outcome against. Youre able to assess whether taking a specific decision takes you further along your plan or moves you away from it.

5. Neglecting customers

The final challenge that is faced by every business in this supposedly service oriented world is neglecting customers.

After all the uphill struggle of finding a prospect, telling them about your product or service and closing a sale, are you just going to let them go? Many businesses do. They are so focussed on making new sales that they forget that the best source of additional sales and new business referrals comes from their existing customer base.

They also forget that when you neglect a customer and lose them, they will tell others. And as a customer with experience they will be believed and that can knock a significant hole in all your marketing efforts.

It costs significantly more to find and sell to a new customer than it does to keep and sell more to an existing customer. Make sure you get your customers’ contact details, look after them and keep building and strengthening the relationship. The first sale should be just the beginning.

And a happy, satisfied customer can do more to market your business than almost anything else.

Copyright 2006 Andy Warren