Manolos on a Mission

Archive for July, 2010

Inflation is the rate where the prices of commodities rise with effect of consumers losing much of their purchasing power. In a logical sense, it can be a change in the value of money which is bounded and affected by time. Usually, inflation is measured in a yearly basis where the term annual inflation rate came from. A more vivid illustration of inflation is that the value of one dollar in 1950 is largely different in the value of one dollar in the year 2000. There is a possibility that a person who has a dollar in 1950 is considered a millionaire in the year 2000. That is an illustration where inflation has made a great impact since a long span of time has elapsed between two dates.

Since nothing is constant except for change, even in the economic sense stability is a status that is difficult to maintain. Thus, inflation is very much inevitable. What governments, banks, economists, tycoons, and consumers can do is to aim to stabilize inflation in such a way that it can be easily predicted. It is a fact that the value of money cannot be forced to remain stagnant so the best that can be done is to acquire the ability to know before hand how much increase in prices and decrease in purchasing power will occur in the coming year. This way, everyone can prepare and take actions on how to cope to inflation.

A directive applied by most governments to help its people from having a hard time getting along with inflation is the promotion of cost of living allowance in salaries. The cost of living allowance permits the adjustment of a person’s salary in accordance to inflation. Since many experts have devised methods to approximate the behavior of inflation, companies can easily adjust employee salary to match the upcoming change in purchasing power.

Marketing is a vital part of any business operation; the success or failure of a business, especially at the start of the operation, greatly depends on the marketing strategies applied. There are a lot of marketing options to choose from including the use of different media such as newspaper or magazines, radio or television. The rise of the World Wide Web also presented the use of online advertising as an option for marketing products and services.

There are several key factors to consider before any marketing move must be made; these factors mainly dwell on the preferences of the target consumers – what appeals to them and what catches their attention. It is very important to convey to the target audience the message that they need the product you are selling, the advantages of your product over the many other similar products available in the market and the benefits that they can get upon patronizing your product. It is very important to ensure that the message is clearly imparted on your target customers through the use of the most appropriate media at the most appropriate time. Some advertisers choose to conduct a market analysis to ensure that the most optimal marketing strategy will be employed.

Any marketing strategy, no matter how great and effective it may be, will not be successful if not coupled with high quality products or services. So it is also very vital to put time and effort in improving the quality of the products or services that you are selling so that your customers will keep patronizing them.

The concept of payback period is an important part in computing the profitability of a business. In its simplest sense, payback period is the amount of time when the business starts to recover from all the initial expenses that it has made due to its start up. After the computed payback period has elapsed, it is expected that any income generated is equivalent to the profit of the business since it already has recovered all of its preliminary investment expenditures. Depending on the size of the money invested, there is a range of payback period that is acceptable to consider a business to be a feasible one.

The computation of payback period is very direct to the point with no complicated mathematical equations involved. Payback period is just equal to the cost of investment divided by the annual cash inflow of the business. The cost of investment is the amount of money spent to start the business considering all expenses made say for the purchase of machines, payment for rent, wage of manpower, and legal fees. Annual cash inflow involves all the income that the business obtains from its operation. The quotient of the two is approximated as the payback period and this is taken into consideration in deciding whether to pursue a business or not.

So when you want to have a quick measure of the viability of a business, you can compute its payback period and use it as a preliminary basis. But keep in mind that this measure also has a few setbacks such as its inconsideration to the value of money at a given time and it cannot measure the behavior after the payback period has elapsed. But among all, it can be a good quantitative basis for making outright minor decisions for a business.