Month: October 2010

A Canadian company, Ziptrek Ecotours, had adopted Costa Rica’s usage of zip lines as a tourist attraction to use in North America and has proven to be quite successful.  Now however, they have chosen to expand their business and have targetted Queenstown in New Zealand to be their market for zip lining.

Queenstown was an optimal location because the tourism industry is very large there and interest in extreme sports is really high.  However, some of the challenges that Ziptrek Ecotours faced was that they had a difficult time seeking government approval for zip lining could potentially cause environmental concerns.  This also brings up the topic regarding business ethics where whenever we make a decision, we should always consider whether this is the right thing to do or not.

Regardless, after persisting for a few years, the company managed to progress with their project, opening on Decemeber 2009.  During this time, Ziptrek Ecotours had spent “low millions” of dollars of which there was also a 25% added cost later.  Taking a closer look at the company on an organizational level, we understand that Operations had a huge part in making all of this happen.  The Marketing department may perhaps had suggest expanding into the New Zealand market and Accounting may have determined an approximate budget for the project however it is Operations that pieces everything together and implements the strategy.  Hence, it is evident that Operations had done a great job in bringing a sport as daring as zip lining into Queenstown, New Zealand.

http://www.theglobeandmail.com/report-on-business/your-business/start/location/zipline-firm-makes-beeline-for-new-zealand/article1765701/

For those who are familiar with Financial Accounting, there are three main types of financial statements: balance sheet, income statement, and cash flow statements.  These documents are meant to help you develop an idea of how your company is doing and whether it’s headed toward the right direction.

Let’s focus on the balance sheet.  A balance sheet is like a picture.  It defines the financial position of a company at a specific point in time and lists out the assets, liabilities and the owner’s equity.  Certain assets are debatable like intangible assets.  Intangible assets are difficult to match a dollar value to therefore cannot be recorded in the books unless it is proven by a transaction.   For example, a company’s brand name would be considered as an intangible asset.  As well, another figure that cannot be properly recorded by an accountant but should be put into consideration is “sweat equity – the idea that business owners shouldn’t pay themselves a salary while they’re building a business”.  It is important to understand that this is not a smart business decision because you are only masking your problems and not solving them.  This will eventually lead you to Chapter 11 bankruptcy.  Therefore we should always be cautious with the decisions we are making.

Although the balance sheet gives us a clear picture of how a company is doing, it will not clearly profile the entire company without examining the other two, equally-important financial statements.

http://www.theglobeandmail.com/report-on-business/your-business/business-categories/financial-management/the-sweat-equity-myth/article1738472/

Most people would not list mathematics as their top, favourite subject however it plays a crucial role in the business world.  In a business, both the marketing and the accounting sectors are interconnected.  Marketing is vital as they need to develop a plan of how to promote a certain product or service however they depend on the Accounting department to provide numbers and budgets as to outline the restrictions for the implementation.  One without the other will not function.

Now, focusing on the Accounting sector, there are two separate branches: Financial Accounting, Management Accounting.  Financial Accounting is more based on recording the past while Management Accounting focuses on the internal process of the company and is produced for managers.

Certain businesses, especially when they have just started, do not realize the importance of accounting and that it could be very beneficial to seek professional advice from certified Accountants.  Mario Costa, a partner in Shpak & Co., would agree that although accounting software is readily available, “[they are] not going to tell you, ‘Oh you have a problem over here.’ It just processes the numbers”.

Another excellent example would be Andrew Wasson, the owner of Creative Guitar Studio.  Mr. Wasson admits to using accounting software however he does pay occasional visits to his accountant for the past 18 years which shows to be very effective as his business has started to expand internationally.  Thus, although I would agree that I am no fan of numbers, they are definitely a very useful tool in the business world.

http://www.theglobeandmail.com/report-on-business/your-business/business-categories/financial-management/a-crunch-too-far-when-to-call-an-accountant/article1769391/

Ever get tired of seeing your hard-earned money sitting in the bank with a very low interest rate that might you perhaps a cent a day if you’re lucky?  Then you should learn to invest!

There are definitely many ways of investing your money but they are generally serve the one of the two purposes: to transfer wealth across time or  to share a risk.  An example would be mutual funds.  Mutual funds are defined as “professionally managed type of collective investment schemes that pools money from many investors and invests typically in investment securities (stocks, bonds, short-term money market instruments, other mutual funds, other securities, and/or commodities such as precious metals)” that are managed by fund managers.

This source of investment has been proven to have their highs and lows.  According to September’s figures, Canadian investors tried redeeming $150 million worth of mutual funds defying “the month’s reputation for being the weakest on average for investing”.

Personally, I would prefer to invest in more physical assets like land and houses however, at the same time, I am not a very high risk taker.

http://en.wikipedia.org/wiki/Mutual_fund

http://www.theglobeandmail.com/globe-investor/funds-and-etfs/funds/mutual-fund-redemptions-rise-on-strong-september/article1742286/

Who doesn’t love gold?  Gold has always been fairly strong in the market and so I definitely agree on investing in this.  Currently, it’s priced at $1,300 US an ounce and is expected to keep crawling up.

David Parkinson describes in his article the 3 F’s (Fear, Facts, Flaws) when investing in the different paths of gold.  A strength of the bullion funds is that they can be bought or sold easily however the downside is that the fund or fund provider can go under and there goes your money and gold!  Gold certificates, on the other hand, is nice because you won’t be charged any taxes and storage or insurance fees for your gold but if the banks fail, then you may not be able to redeem the money written on the paper.  Physical gold bars and coins feel a lot more reliable since you are in possession of them however storing the gold can be very risky and expensive.  Another alternative are gold futures and it’s quite safe because if you are able to sell it before the contract expires, you’ll never have to deal with the actual delivery of the gold.  Unfortunately, investors like your mother and father would not be able to participate.

http://www.theglobeandmail.com/globe-investor/investment-ideas/the-fears-facts-and-flaws-of-buying-gold/article1735855/