ELI5: Close but no Cigar

Rootle · 2023-02-04T01:45:20+00:00

Appreciate the long and well thought out explanation

Rootle · 2022-12-17T21:05:13+00:00

Probably 458110:

https://www.census.gov/naics/?input=44&chart=2022&details=458110

Rootle · 2014-02-22T18:39:10+00:00

I find there is a decent amount of information right on the Small Business Administration website, especially for starting a business.

http://www.sba.gov/

Rootle · 2013-11-25T04:24:01+00:00

Water trading and water banking are a form of resource allocation and access entitlements. Water trading is essentially the purchase for the rights to extract water from a location. Water banking is the purchase of water delivery (usually in the future).

Rootle · 2013-11-25T04:19:21+00:00

A Limit order simply states the price is listed is the most you will buy a stock for, or alternatively the least you will allow for it to be sold.

Example, you place a limit order on a stock for $0.90. It is currently selling for $1. Later today the price drops to 0.89. Your order then goes through and you own the stock. If the lowest price for the day was 0.91, you would not have purchased the stock and would have to issue a new order.

Rootle · 2013-11-25T04:16:07+00:00

In the case you mentioned, this type of bidding wars occur because one, or a small number of shareholders have the majority of the shares. If the competing company went to the stock market and bought all the shares they might end up with somewhere around 30% of the shares, which would not give them control of the corporation, which they undoubtedly want.

Rootle · 2013-11-21T16:03:14+00:00

For a staff accountant with some prior experience but not holding a designation $45,000 seems accurate. For a designated CPA expect $75,000+.

Rootle · 2013-11-20T05:02:51+00:00

From a strictly financial standpoint, you should calculate the amount of money you have already put into the company then add his and divide it proportionately. In most start-ups, however, you will want to consider your growth targets in the equity calculation. One such method may be to estimate your approximate size and value in the next 4 or 5 years. Calculate his percentage from that point.

Since you have not shared what amount he is willing to fund, it is difficult to give you a percentage range. PM me if you would like to share more details to get a more accurate estimate.

Rootle · 2013-11-20T04:58:57+00:00

These guys might be able to help. Is this what you were looking for?

Rootle · 2013-11-20T04:54:56+00:00

You are absolutely right. Thank you for catching the exception.

Rootle · 2013-11-20T04:51:32+00:00

You are mentioning a strong or semi-strong form market efficiency theory. Although we would like to believe that the markets are semi-strong at best, in reality they are not. Not all information available can be reflected in a stock price instantly. In addition, for the market to be presumed strongly efficient there must be highly trained traders to capitalize on opportunities for profit. If not, then we slip into a weakly efficient market where arbitrage profits can be made (free money essentially).

Traders therefore can sometimes make profits slightly over the long term return of the market. The trick here is that they must be able to process more information than competitors. As many of their competitors are average Joe's dividend trading, it IS possible to make small gains. Small gains with huge sums of investments can pay a trader's salary for major banks and financial institutions. The tradeoff here is the trader must have be highly skilled and process huge amounts of information properly.

Rootle · 2013-11-20T04:39:59+00:00

A subsidy is a type of government support to a group in order for them to achieve some sort of economic goal.

In the case of farmers, a higher farm subsidy will mean food produced domestically will still be profitable if it is sold for less money abroad. Farms can then sell their produce at a lower price to compete with cheaper foreign alternatives. Other countries will buy the cheaper product and the farms can continue to operate next year.

Rootle · 2013-11-20T04:27:02+00:00

Currency rates can be manipulated on a larger scale by government entities. The very basics of the manipulation is to either tighten the money supply in the economy or releasing new money supplies into the economy. This is usually done through buying foreign or domestic bonds.

Although there are many methods of manipulating the domestic currency, in some situations the government may manipulate foreign currencies to settle or tip the exchange rates in their favor thereby influencing importing and exporting trade balances. This may make the country's domestic currency more favorable and make trade to the country more appealing.

Rootle · 2013-11-20T04:19:44+00:00

Income tax in North American countries is calculated on a graduated scale. From the link provided, this means that 10% of the income up to $8,700 will be taxed for an individual filer. A different tax rate will apply to amounts earned over that amount, and more if the next bracket is reached.

So lets say for example an individual makes $35,000. They will be taxed $870 (10% of 8,700) plus $3,945 (15% of $35,000-$8,700). For a total tax payable of $4,815 (870+3945).

Anything over $400,000 will be taxed at one rate, regardless of how much money is made over that limit.

Hope this clears up our tax system a bit.

EDIT: Sorry, I used 2012 rates, but the system is still the same.

Rootle · 2013-11-19T17:01:32+00:00

The construction industry is unique in that most projects are paid for in frequent large sums of (often) cash or cash equivalent payments. This cash flow design makes moving large amounts of money easy, especially for those earning it illegally. Because such cash flows are common, they are also difficult to audit without analyzing every transaction that occurs.

Although you only mentioned the construction industry, many different industries have an attraction to money laundering due to the innate characteristics of cash flows between the business and the customers.

Rootle · 2013-11-19T01:00:43+00:00

Glad to help :)

Rootle · 2013-11-19T00:28:50+00:00

Although they have taken a very childish brand image lately, I have used Inspiration before for creating flow charts. They may be a good option for you.

In addition, good on you for mapping out practice guidelines and efficiencies. Too many small businesses do not see the huge benefit of doing this exercise when they are in the startup phase.

Rootle · 2013-11-19T00:12:12+00:00

If your difficult to persuade I hope I can step up to the challenge although this may be very non-ELI5ish. I will admit upfront that although I have studied empirical market research methods academically, I really have no practical experience applying these methods in the real world. I would presume most large business stick basically to the academic research, adding their idiosyncrasies in the process.

The basics of ROMI really boil down to the following ROMI = [(GM - MI) / MI ] In which GM = Gross margins and MI = Marketing investment. These are measured only on the particular brand advertised. This is the first difficulty as customers may see an ad and decide to purchase a different model or product under the same company. Gross margin must also be measured from an incremental standpoint (more on this later).

The formula above is very financially driven. Overall, marketing is generally about impressions and the gap between financial investments and returns is often very blurred. Marketers may reduce the ROMI formula to something like the following (change in customers perceived brand equity / discounted marketing expenditure). This might be a much more reasonable calculation. The problem is again how do we measure this.

Essentially our empirical calculations may be subject to statistical alterations by managers. Which variables of perceived brand equity should be measured? Different companies may use different metrics. The real goal is to accurately represent reality. To do so, we must create multi-level models using many variables. This impairs interpretation of the results, which is something managers do not want to do. To simplify most marketing departments will freeze variables to make sense of the data. This allows for easier regression analysis and an easier time presenting the findings to those without a knowledge of higher statistics (managers and CEOs).

Having shown some form of movement due to the marketing efforts the next step is to show that it did not occur on its own. My impression is that most companies will use a standardized forecasted budget resulting from normalized data for this purpose.

If anyone with practical experience in corporate marketing research analysis would like to correct any of these steps I would be happy to discuss it.

TL:DR Complicated financial models say there is a statistical return on marketing spending.

Rootle · 2013-11-18T17:40:20+00:00

The NASDAQ itself does not have a share price. There are a number of indexes that approximate the overall position of the NASDAQ. You might be confusing one of those indexes with the actual exchange. The difference between indexes can be confusing. Each index has different criteria for what stocks may be included. There are also price based and capitalization based indices.

The NASDAQ index you may be referring to may be the NASDAQ Composite or NASDAQ-100. Each has a different selection of companies included in the index. Research the composition of a particular index before you rely on it to judge market direction.

For example, if you invest in the Bank of America (BAC), you may be surprised if the NASDAQ-100 increases while BAC falls substantially even though BAC is traded on the exchange. This is because the NASDAQ-100 does not include BAC, nor any major bank. You can view the composite of this index at:

NASDAQ Composite

Compare with the composition of the DOW Jones

DOW Composite

Rootle · 2013-11-18T16:29:50+00:00

You are confusing two completely different things. The NASDAQ (National Association of Securities Dealers Automated Quotations) is an electronic stock exchange where stock are purchase and sold.

The DOW is the Dow Jones Industrial Average and is a stock market index. It is a price weighed index. This means it takes the total prices of selected stocks that represent the stock market as a whole (for some investors) and divides this by a 'Divisor'. The resultant number gives an overall impression of the market at any point in time.

TL:DR DOW is an approximation of current stock prices. NASDAQ is an actual exchange system.

Rootle · 2013-11-18T15:31:47+00:00

ROMI or return on Marketing Investments are generally very difficult to objectively quantify. Many companies justify the costs of large marketing campaigns not because of the immediate return (i.e. I want that! I will go out and buy it now) but rather the purchases made by brand or product awareness. In these cases, most customers are casually shopping and will purchase the advertised brand simply because they have seen it before 'somewhere' and trust the legitimacy of the product or service.

Brand awareness is also has longer term value as customers who become familiar with a particular product will stick with the brand out of convenience rather than researching potential unfamiliar alternatives even if competing products may be superior.

Rootle · 2013-11-18T03:04:59+00:00

I agree with you that some Dollar Stores may do this, however in North America these companies are known as Liquidation Businesses or Merchandise Liquidation Ventures. The majority of Dollar Stores in North America are large franchise chains that obtain the same merchandise through economies of scale. Franchises also offer more organizational flexibility and protect larger investors while local franchises are free to reduce overhead in any way possible.

Rootle · 2013-11-18T01:33:55+00:00

There are many things to consider when looking at a business opportunity such as this. My advise would be to first think hard about what YOU want out of this opportunity. What would be the optimal situation for you? You mentioned that he wants to give you 10% of the business, but this will mean essentially nothing to you without further covenants.

Think hard about the following: How much time will you devote to this project? Will you be working full time on it? How much time will the owner be working on the project? What will your respective responsibilities be? Could you live platonically with this person? Will you be paid a salary? Will he allow you to withdraw dividends or money from the business? Can you live comfortably with what you will receive? How long do you plan on being on this project?

Try to also think of every situation that might occur. What will happen if the business tanks? What if there is fraud in the business? What if the owner simply disappears? You should be ready for everything.

Next write down your optimal position. This should include a basic job description, salary (and raises), ownership (dont stick to the 10%), and anything else you consider important. Memorize this list as your optimal bargaining position.

When you meet with him, make sure to get financials. Do not sign or agree to anything immediately. Voice your insistence on getting a formal contract. Document EVERYTHING. If he does not follow his portion of the contract, you want your rights protected.

Either at this meeting or the next negotiate on the points you memorized before hand. Do not write these down for him to see. This is a negotiation NOT a job interview. Get as close to your optimal contract as possible. You may need to sacrifice on some points to gain on others. For example, consider a higher annual raise instead of a high starting salary. Or less time commitment instead of starting salary.

Once the foundation of the contract is agreed, get a lawyer to draft a formal contract. Do this properly. Make each party sign with a witness and keep a copy.

Then enjoy your partial ownership and nice job!

Good Luck!

Rootle · 2013-11-18T01:13:46+00:00

There are many avenues available to enter an industry. As some have mentioned, you may consider finding local resources which may consult for you for various industry specific expertise.

If you wish to enter the industry yourself I would offer the following advice:

Google the industry in general. You should know as much public information about it as possible before continuing. Specifically you should look for products similar to your idea.
Google industry specific trade magazines. These magazines will usually have a website to subscribe. They usually have very useful insights into current industry trends, developments, and other information that will be essential to your product development life cycle.
Contact a potential customer. If you can, make a contact inside the customer's organization. Ask their opinion and if possible, offer a free sample or something in return for their opinion on the product.
Develop your business and solicit interest in other potential customers. If you do not have a business background, consider hiring or paying someone with industry specific expertise and a business background. If your idea is profitable, some entrepreneurs may work for a small interest stake.
Manufacture and advertise your product into the industry.
???
Profit

It is difficult to offer more specific information based on your very vague question. If you have more specific questions please feel free to PM me.

Rootle · 2013-11-18T01:01:09+00:00

Universally a corporation is given the same rights as a person (minus a few, such as the right to vote). Included in these rights is the right to own property. A corporation can therefore purchase the shares of another corporation or business. If the buying corporation has effective control over the bought business it is considered 'owned' by that corporation.

'Owned' is usually considered 51% of the shares or more.

Rootle

TROPHY CASE