Twitter’s Public Offering: What’s In It For You?

Are you aware that there are now 218 million active monthly users on Twitter worldwide? There are also over 500 million active registered users, with 100 million of them logging in on a daily basis, resulting in a daily average number of tweets of 58 million, generating 1 billion tweets every 5 days!

You will be surprised to know that 3 million websites are integrated with Twitter. Now, 87 percent of Twitter’s revenue comes from advertising, with 65% of its advertising earnings coming from ads on tablets and Smartphones. However, inspite of these impressive numbers, Twitter has never made a profit? Did you get that? Never made a profit!

With these statistics, I’m not sure the Twitter IPO (Initial Public Offering) is completely out of place.

Come November, Twitter will be offering itself on a dish to the public. There will be a lot of expectations for Twitter’s market debut. Twitter has announced that they will sell their shares between $17 and $20, and they plan on selling upwards of 70 million shares valuing the online messaging company at about $11 billion. This is $4 billion less than analysts had expected, and far below the $100 billion valuation that Facebook received in its IPO in May 2012.

Before it went public, Facebook had reported an annual profit of $1 billion and revenue of $3.7 billion. In contrast, Twitter reported a net loss of $79.4 million on revenue of just $316.9 million in 2012.

Twitter's executives are however optimistic about the IPO plan as they work around the clock dotting i’s and crossing t’s. They organized an eight-day roadshow to promote Twitter's IPO with the aim of selling up to $1.6 billion worth of shares in the second largest social media company.

In a bid to avoid hitches, Twitter has also chosen the NYSE for its forthcoming initial public offering ditching the NASDAQ to avert the kind of disappointment that followed Facebook’s IPO.

If you happen to be one of the 500+ million users of Twitter, I guess you’re wondering what you stand to gain for all those months/years of devoted twitting? How is Twitter going to reward you for your loyalty you may ask. Well, I have no ready answer to that question, but Facebook after its IPO introduced some stunning features like the Graph search features, an improved iOS update that allows structured personal status updates, better privacy settings and so on. Maybe twitter can offer you something better. We’ll just have to wait and see.

Financial Market

Debt Ceiling

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What to do when you've got more money than you need

Image credit: Steve Wampler/Flickr

Have you got more money sitting in your account than you need?

Some may ask, what's the right amount of money to keep in order to cover current expenses? Just like anything else, this will generate various opinions. But the safest thing to do is to keep enough money on hand to cover at least two months expenses. So what should be done with the excess?

Once in a while we may run into some loose cash and then the next question which pops up in our head is what to do with it: Should we consume more, buy that pricey car, spoil the loved ones in our lives or should we invest and hope it grows into something much bigger.

The conservative ones may choose to bury the extra cash in a savings account and don’t care if it’s earning next to nothing. "How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case." - Robert G. Allen.

Well, putting money in a savings account will not suffice.  As interest rates remain extremely low, your money is actually losing its value to inflation.

On the opposite end are the risk lovers, who may decide to do more adventurous stuff with the money. Here you have people who might decide to make riskier investment choices, acquire businesses, or become business owners themselves. This has its cons too.

Businesses also contain an element of risk and statistics have revealed that when investing in new businesses, if the amount of money required for the business is $10 for instance, you should be ready to forgo double that amount. It has also been shown that the first invested sum usually goes down the drain (sunk cost). So except you happen to be one of those lucky ones who’ve got the instincts of a cat and know when not to invest, this option might just be darn too risky.

So now you know that keeping large sums in a savings account is like burying one’s talent in a napkin, and you also know that it’s not advisable to dive headlong into investing in businesses, one may decide to shun investments and divert all funds towards consumption. Now is this a smart decision to take? Let’s find out, shall we?

Let’s draw from the experience of John; John was gainfully employed with a commercial bank in the city. He earned an impressive income and lived comfortably in a rented luxury apartment, he ensured his children went to the best schools and his wife made her hair, make-up, shopped, and so on, in the choicest places in town; vacations were being enjoyed lavishing, at times weekends were in exotic cities, he changed his cars at will and changed his phones immediately a later version was introduced. He was living “the life”...He truly was.

However, due to one Government policy, restricting banks from delving into some business lines, John’s job function was rendered redundant and in no time he was laid off by the bank. Thus he had no source of income; he had to move to a cheaper apartment in the suburbs, switched his children’s schools, and cancelled the customary lavish family vacations, etc.

Now, John was in trouble, he then realized that with the amount of money that had gone through his hands, he would have been able to secure a better future for himself and his family if he had spent wisely, rather he lived only for the moment and consumed all. John overlooked something very vital.

So, I think we’ve all learnt from John’s experience, and you can now agree that it is better to use that spare cash to kick-start something that promises a high probability of multiplying your wealth. I’m referring to sound investments now.

The good news is that you don’t have to be a genius to invest well. Buffet once said, “You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ...” Did John ever hear this? I very much doubt that.

Safeguarding you from John’s missteps, our Investment road map should be able to guide you in making sound investments. 

Managing an unpaid leave

Photo credit: Kristina Alexanderson/Flickr

As the US Government shutdown continues with no clear end in sight, hundreds of thousands of workers are waking up to the awful news that they are on unpaid leave, and even worse, they don't know how long this will last.

If you happen to fall into this category of workers or you know someone who does, here are a few tips on how to manage the situation.

#1: Focus on the essentials

Photo credit: Thomas Hawk/Flickr

It’s time to streamline your expenses towards what’s essential. As resources dwindle, the key thing to remember is to spend whatever that is left wisely.

Now is not the time to get a facelift, revamp your wardrobe, go on a shopping spree, or sign up for another credit card. Just focus only on the essentials – health, food, bills, transportation and so on.

#2: Turn to your savings

Photo credit: Images Money/Flickr

I’m certain not referring to your retirement savings here. Withdrawing money from a retirement account before retirement age should be a last resort after all last resorts. Here’s where the liquid / short-term savings come in handy.

However, when it comes to what you spend on, be sure to seek the best values in the market. Paying a high price is certainly no guarantee that you’re getting high quality.

#3: Find income elsewhere

Photo credit: Flood G./Flickr

Who says you can’t earn from home? A person who is home all day can still earn a small income. If you take a good look around your home, chances are you have some items you never use.

Are you thinking what I’m thinking? It’s time to convert that clutter to cash. When was the last time you had a garage sale? Now will be a good time for that.

Doing jobs around your neighbourhood too can be considered. Also try turning your hobbies into small earnings; it’s a lot more fun than some jobs and rewarding too.

Cheapest ways to raise capital for your business

Image credit: Tax Credits/Flickr

Most of us belong to the school of thought that believes that the surest way to true wealth is by having your own business. But then we all need capital to start a business. Thus that brings us to the question; how do we raise capital without getting into serious trouble?

When it comes to sourcing of funding for a start up business, most times, it is ill advised to source funds from financial institutions.

The great difficulties encountered in accessing these loans together with the stringent requirements of these institutions which include sufficient collateral, high credit rating, past business history etc., make this source of financing quite complicated.

So let’s run through some very interesting and cheap sources of finance to get your start-up running.

#1: Savings

One way of getting capital to start up a business is via savings. One could start up by saving rather than borrowing money. This means that one would have to be as frugal as possible and start up the business in its small form and then grow it organically.

In using one’s savings, we could also explore the use of additional ‘financing’ in the form of negotiating for extended credit periods, minimizing moneys owed by debtors, delaying payment where necessary, and minimizing inventory.

A great advantage of using this source of finance is that the business would belong solely to you; no pressure from friends, family or from financial institutions, thus all the gains to be achieved are shared with no one.

However, on the other hand, saving most times is seen as a restrictive source of capital as it is restricted to only one individual.

#2: Family

Another source known to man is Family. Research has shown that family members are great and prominent sources of capital provision. Most times it is free as family members rarely request for interest.

In addition, the penalties for default are lenient as it mostly ranges from suasion to scolding, if you know what I mean.

Nonetheless, unless one is from a wealthy family, the amount of money which can be realized from this source is quite limited.

#3: Angel Investors

“Angels have no philosophy but love.” said Terri Guillemets.

A third source of cheap financing is the Business Angel. Business angels are affluent investors who provide capital for business start-ups, usually in return for convertible debt or ownership equity when the business becomes profitable.

So if you have a business idea so great, you most probably will be able to find an angel to finance it.

As Thomas Edison said, "The value of an idea lies in the using of it."

So if you’ve ever had problems growing your innovative ideas into start-ups, because of poor funding, now you’ve got 3 sources of cheap finance you can work with. It’s now time to take the leap and chase the vision.

Make that choice soon and kick-start that investment which would in turn kick-start your wealth.

Gareth Bale Transfer: What employers can learn from it

Image credit: Pablo Morquecho/Flickr

Real Madrid finally acquired Gareth Bale from Tottenham FC for a record £86 million transfer fee.

£86 Million! That’s the value placed on Gareth Bale, making him the most expensive Footballer In the world!

In other words, Real Madrid believes Bale can benefit them to the tune of £90 Million.

I'm not going to go into what makes Bale so exceptional, but let’s take a look at the possible factors that managers and club owners could use to gauge a player’s value, shall we?

One major factor could be talent, that is the skill of the player. Another factor could be his status in the squad. Is he indispensable? Some other factors could be adaptability (ability to adapt to the league’s style of play), image rights (revenue expected to be generated from merchandising sales through a player), and on and on.

By valuing players properly, clubs can better manage their budgets and ensure they do not overpay or underpay.

So if football club managers can go through all this strain just in anticipation of trophies, why can’t employers in the labor market do the same? Every employee is an important and unique asset that will subsequently generate value, no matter how little, to the establishment where he works.

At this point, I can safely say that Football Club managers know how to manage and value their human resources better than employers in the labour markets.

Do employers also see that employees are assets to them? Do they value their employees as such? I believe it's time to rethink the fixed wages, unchanging pay grades, commissions and all the rest.

Employees create value with their ideas, work, skills and expertise (just like footballers). This value created undoubtedly translates into economic benefits (present and future) for the employer. So  employee wages can be valued based on expected innovation, creativity and other important skills that employees will potentially translate into funds for the employer. And I'm not referring to Profit-Sharing here.

In essence, I think it’s time to do it like the football managers and value employees, as in the case of Bale, like all other assets or investments by judging employee pay based on the intrinsic value and expected future economic benefits likely to be generated by that employee.

What's your take on this?

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