The Index of Economic Freedom

The Index of Economic Freedom

   The Wall Street Journal and the Heritage Foundation have spent over 10 years tracking economic freedom world wide, producing a yearly index delineating those freedoms. The Heritage Foundation website, www.Heritage.org, defines economic freedom this way:

Economic freedom is the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please, with that freedom both protected by the state and unconstrained by the state. In economically free societies, governments allow labor, capital and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself.

   Using a 1-100 scale, they measure economic freedom using the following 10 items for criteria: Business, trade, investment, fiscal, financial, labor and monetary freedom, plus government spending, property rights and freedom from corruption. The good news is that for the 183 economies studied, most made modest gains. Furthermore, the greatest gains occurred in emerging economies. That means more people are rising out of poverty and entering into the exchange of money for goods. This bodes well for future business, including small businesses.

   The Executive Summary of the report contains highlights of the salient points found in the survey. One claims that high levels of government spending have not equaled economic growth. The report states, “In light of the economic crisis, many advanced economies’ governments have stepped up their direct interference in the economy with government spending. Though volumes of evidence have highlighted the negative results of massive government spending, in a time of crisis, some have tried the Keynesian policy prescription of stimulating demand with government spending. That spending, more than any market factor, has posed the greatest risk to economic dynamism. Relying on government spending in the form of various stimulus packages not only has failed to promote growth and employment, but also has seemed to prolong the crisis by hampering private-sector investment. Bloated government debt has turned the economic slowdown into a fiscal crisis in many countries, with economic stagnation fueling a long-term employment crisis.”

   The report makes the correlation between economic health and overall well-being of the people living in nations with economic freedoms. It turns out that good business does good for more than business owners: all people in a nation live improved lives when they have healthy economic freedoms. All aspects of the citizens’ lives will revolve around the economic activity carried out in a free country.

   The report declares that the “principles of economic freedom emphasized in the Index are individual empowerment, non-discrimination, and the promotion of competition.” It should be self-evident that the more people can control their economic lives, the more they prosper.

   The Index charts the improvement over the past 18 months in economic conditions world wide. Despite a jobless recovery, continuing unemployment, and myriad other difficulties, economic conditions are slowly improving. More people are able to increase their purchasing power. For all business owners, this is welcome news. As more people are able to control their financial destinies, increased business here and abroad will bring new opportunities and eventually new jobs.

Have a terrific day!

Patricia

Adding Value to Your Business

“Price is what you pay when you buy an asset, value is what you receive for your money.” Warren Buffett, CEO of Hathaway.

   Value is not limited to an economic or numeric digit in your business. Value can be physical or intangible or both. Your business’ value is not determined solely by what it can bring in a sale of the business. You have value in your product, in your employees, what your company does, your assets and your relationships. Whatever you sell, your buyers perceive a value for your product. That perception is the key to adding more value to your business.

   Focusing solely on cost-cutting to reduce your expenses is short-sighted. You can compete for customers on the basis of the additional value you bring to the table. Generally for small businesses, this means customer service and retention, referrals to new customers and developing ideas to keep your name in front of new prospects by highlighting your extra values. The marketplace rewards low-cost, high volume sales. There is still a need for high customer maintenance.

   If you own a small business, you know that your customer service will give you the advantage over larger businesses. If I need cat litter, I might buy it at a discount store. If I want distinctive quilting fabric, I will shop at a quilt store that caters to the special desires and needs of quilters. The quilt stores have a loyal following because they take the time to deliver exceptional customer service, offer special ordering, help solve customer problems, and inquire after the grandkids. All this is done in the name of good business. In an age of overt customer self-sufficiency, this coddling feels good.

   As a business owner you invest in your business and employees. Recruiting, training and retaining good employees helps your business run well. You want customers to have good experiences when they use your services. This is even more critical if your business is not a bricks and mortar place. When your business is consulting, the only way customers judge your effectiveness is by the way you treat them and really listen to their concerns. Relationships are everything in small business. Your customers and employees find great value in what you offer. This keeps you in the game.

   After relationships, how you present information is critical. Most people spend only a few seconds searching for information on the Internet, so your site better contain useful information that drives traffic to your business. These ideas work for services as well as products. Information is the coin of the realm today. Here are 10 tips to help you add value. These ideas come from Dr. David J. Skyrme and were first published in Managing Information. (The idea is Dr. Skyrme’s, the definition is mine.)

Timeliness: Information changes rapidly. Keep yours up to date.

Accessibility: Information should be easy to find. No obstacles.

Usability: Keep it simple for the user.

Utility: Designed for multiple users.

Quality: Accuracy, credibility.

Customized: Appropriate for the business and user.

Medium: Portable use.

Repackaging: Update it constantly.

Flexibility: More than one way to use it.

Reusability: More people can use it and use it often.

   Adding value is a matter of caring about what you do, who you serve, why you exist and how to communicate your best to the public. This will help keep you in business and prosperity.

Have a terrific day!

Patricia

Welcome to Biz News and Views

   This is something like an IPO for a blog. Welcome to the site and I hope we enjoy our journey together. Biz News is about news and tips for business and personal management. The point is to help you save money, grow and protect your money, and get out of debt.
   What can you expect? You will read information on business, geared specifically to small business owners and new entrepreneurs. You will also read information on how to tackle your personal finances. Most of the blogs will be short articles. If you're on the Internet reading, you probably won't respond well to 15 pages of statistics and complicated formulas. There are other places to find that kind of in-depth reporting. (Try the library, if money is tight. Libraries have something for everyone and they are free to use. Just return the books and other materials in good condition and on time!)
   You can expect honesty and integrity here. You won't find hyperbole, except as humor. The sky is not falling; I don't believe it will fall in my lifetime, so my philosophy is to go forward believing the best days of America are ahead of us. Whining and hand-wringing isn't very interesting to read, so look elsewhere for that sort of thing.
  In order to maintain credibility and not confuse the literal-minded, I will distinguish between "real" writing and reporting and my opinions. Unlike some print and broadcast folks, I can tell the difference! After spending many years ensuring my words were truthful, I am not about to ruin my record by confusing people.
   A word about comments. If you are vulgar, nasty, hateful or threatening, you won't see your golden words published on this site. A caveat: My work is copyrighted and you really don't want to hear from my attorney if you attempt to steal my work. (Smile) 
   I look forward to sharing with you.
   Have a terrific day!
Patricia