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It’s well-known that we live in the Information Age. Once upon a time it was the power of industry—great pieces of equipment operated by countless laborers working countless hours. As economies of scale developed, so did the assembly line and the furtherance of the manufacturing-based economy. As the industry-based landscape matured, the economy advanced to the point where specialization became increasingly important. As the twentieth century closed we had harnessed the power of the Internet. Combined with all other elements of the day our manufacturing-based society in the United States and other locales converted into an information-based economy.

Industry-based economics seemed to be a stepping stone to where we, in the west, are now; just as other places in the world go through this phase of their development we are shifting away from such and into a paradigm based around information, services, and facilitation. This information-based economy is revolutionizing old models and paradigms and changing the way that the various agents in each component of the economy interact with one another.

For the consumer part of this is that the Internet has had a tendency to democratize everything. eBay, with its online auctions, and Wal-Mart, with its harnessing of technology to make its business processes more efficient have collectively acted as the “invisible hand” of economics and made marketplaces more efficient: There is arguably not much profit to be made from these two businesses short of selling in volume. Wal-Mart posted a net profit margin of 3.6 percent in 2005, down to 3.2 percent in 2007. eBay has epitomized the low- or zero-profit margin on the Internet: In an online sense I firmly believe that eBay is as efficient as a market gets.

Each of us goes through our days selling our time to other people: For most of us that means selling our time for a wage or a salary, and maybe some benefits. Whether that means flipping burgers at the local fast food restaurant or bagging groceries for minimum wage or being a vice president with a bank, you are effectively selling your time to your employer for a price which you and the market will handle. In essence, you are a product which you must develop, market, and sell to employers seeking you and your product. This is simply a new way at looking at an old paradigm, though. I’ll breach that topic at another time. For now, however…

Imagine an extension of the above premise with the basis that you are a product such that you, instead of selling your services to your employer, could sell the services you provide to your employer directly to the customers which you already serve. Cut out the “middle man,” and eliminate inefficiencies at that level. Instead of being tied down to the policies, protocols, bureaucracies, and whatever else you don’t like about the time which you’re selling to your employer, you would be your own boss. You would be in control of your own destiny in the marketplace. You wouldn’t have to worry about performance reviews or a supervisor validating you: The marketplace which you serve would instead be the entity which validates your abilities and efforts.

There are a few, however, which can’t fit into this model. This does not mean, however, that you can’t work within this new paradigm, however.

Each person has not only the “hard” job skills and the “soft” ones they sell to their employer: They also have skills which they apply to hobbies or other “extracurricular” activities that occupy the time which they are not working for their employer.

This is where the famous adage “do what you love and find a way to get paid for it” enters. This is the ideal route. Find a way to do that which you love and make an occupation from it. Obfuscate the traditional definition of “work” so that it seems like play to you, particularly if you are that type of person who differentiates between “work” and “play.”

A lot of these hobbies-turn-jobs can be done as a sole proprietorship: Being in business for yourself, using yourself as the sole business entity. Although it is less difficult to deal with than its more sophisticated brethren, it is also just that: Less sophisticated. Not offering any liability protection is the greatest disadvantage of this form of business organization.

The next higher form of business organization is the partnership. There are multiple types of partnerships, but the key factor in choosing a partnership is that it offers a level of protection against liability inasmuch as it spreads liability amongst a group of partners. General partnerships, limited liability partnerships, and limited liability companies are the fundamental organizational forms which they take. For more, read up on them!

Next up are the corporations. The most sophisticated form of business organization; it is also the most powerful. A corporation is considered its own separate legal entity: In other words local, state, and federal governments consider it to be its own person. As such all liability taken on by a corporation is the responsibility of the corporation. Each “co-owner” or shareholder of a corporation is only liable for as much as they invest in the corporation. Put another way if you invest $1000 into a corporation and the corporation completely tanks, you only lose your $1000. The “classic” corporation is the “C-Corporation:” This organization type is typically unlimited to the amount of shareholders it can take on but can be taxed as a corporate entity (corporations are taxed as such in U.S. states; not at individual rates) and the shareholder is responsible for their financial gains from their investment in the corporation as well. Corporations are wonderful things for making money; as Ambrose Pierce humorously defined a corporation: “Corporation, [noun]. An ingenious device for obtaining individual profit without individual responsibility."

The other corporate entity is the “S-Corporation.” While some consider it a “glorified partnership,” the government still considers it a type of corporation. The name is derived from the portion of the Internal Revenue Service’s tax code that allows for the existence of this entity, “Subchapter S Corporations.” Essentially, the Subchapter S style of corporation allows for tax liability to be “passed through” the corporate veil such that each shareholder is responsible for paying them: While a regular C Corporation is double taxed (corporate plus individual), the S Corporation doesn’t pay corporate taxes, instead the individual shareholders are responsible for paying taxes on their individual investments in the enterprise. Subchapter S Corporations are typically corporations that are originally formed as C Corporations in their respective states, then paperwork is filed with the IRS in order to gain recognition as an S Corporation. An example of an S Corporation? My own.

Why such the long blog post? Because, at this time of year it seems that everyone is thinking about what moves to make in the year ahead: The obligatory New Year’s Resolution. Why not, in the upcoming year, figure out how you can break the “tyranny of the 9 to 5,” get away from the “dungeon of the cubicle” and figure out how you can become one of the successful string of businesses that drive innovation and contribute to society? Maybe it is for you, and maybe it is not for you. I strongly urge you to consider, however, this option.

While these steps take a skill set that is general and diverse in nature, one of my string of topics in the forthcoming year will be to develop the skill set required for a business owner, small business operator, or even CEO of one of the large multi-nationals. However, if you’d like to request a topic, please feel free to email me a question, your suggestion for a topic, or your feedback at this address!

E-Money, Part 2

The introduction of the Euro is an example of progression in the classic economy toward an all-digital economy. On the first of January 2002, the Euro became the standard currency of the member countries of the European Union. The Euro was introduced because the barriers to trade created inefficiency and waste and current systems created less value in each of their monies. This affected European countries when conducting business with the remainder of the global marketplace. Standardization of the Euro as the single currency in 12 countries of the European Union reduced the cultural barriers to trading with one another and unified at least 12 separate markets. The unified European marketplace is making it easier for other major markets in the world to do business with them, as well. Despite earlier doubts, the Euro has gained market value to be nearly of the same value as the U.S. Dollar, the most compared-to currency in the world.

This introduction of the Euro has been indicative as a case study of what evolving several markets into a unified marketplace can do to an economic system. Unifying markets can be defined as unifying resources, however, there are the structural changes that need to take place including infrastructure, demand, and a single currency. The infrastructure, as noted earlier, exists in the current capacity of the Internet. Further redundancies, such as more “backbone servers” that operate the core of the Internet, are necessary; as is the need for more bandwidth increases and the standardization of the languages and protocols that transport data. The demand exists because of increased efficiency involved with international transactions, thus relieving some of any trade deficit or increasing any trade surplus: This effect alone would sell the governments of the world to the idea, keeping in mind that the U.S. Government accounts for roughly one third of all monetary transactions in our $10 trillion economy. The single currency in this new, all-digital system would be simple: The “credit.” If all national markets were to utilize this “credit,” it would decrease the amount of waste in the world today. A major problem that critics are likely to point out is the problem plaguing individual currencies today is inflation. The best way to arrange this is to mimic the way that the European Union dealt with introducing the Euro to member nations: Rules were enacted to impose a strict level of fluctuations on the Euro. These rules were strict, since countries who wished to participate in the euro and be a part of "Euroland" had to pass some economic tests referred to as convergence criteria:

• “The country's annual government budget deficit (the amount of money it owes) cannot exceed 3 percent of gross domestic product (GDP, the total output of the economy).
• The total outstanding government debt (the cumulative total of each year's budget deficit) cannot exceed 60 percent of GDP.
• In order to push down inflation rates and encourage more stable prices, the country's rate of inflation must be within 1.5 percent of the three best performing EU countries.
• The average nominal long-term interest rate must be within 2 percent of the average rate in the three countries with the lowest inflation rates. (Interest rates are measured on the basis of long-term government bonds and/or comparable securities.)
• The country's exchange rates must stay within "normal" fluctuation margins of the European Exchange Rate Mechanism (ERM) for at least two years. “ (Howstuffworks.com)

With such controls in place, it is likely that a universal “earth credit” would be an attainable standard.

Now that the theoretical groundwork has been laid, how is this somewhat evolutionary, somewhat revolutionary system going to change the way individuals and businesses buy and sell goods and services? Every time that a consumer purchases a good or service a small stream of credits will flow from one place (the consumer’s bank account) to another (the business’s merchant account) through cyberspace; every time that a business takes their margin of the profits gained from that sale to the consumer, and spends that on providing more, better items for the consumer, their account will see a decrease of funds while the business that they purchased the goods from sees an increase in their account. Imagining the endless flow of goods from their manufacturers to the consumers, and the endless flow of credits from them to the companies that serve them, a seamless flow develops between the consumer and the business. This shortens the metaphorical distance between the two, and makes the relationship that the business has with the consumer stronger. This will allow a better product for the consumer and better customer relationship management by the business. It will also allow for the business to better understand the consumers that it serves, and produce better products based on the changing needs of the consumer. By changing the system by which everyone makes their transactions with one another, everything is streamlined and people grow closer and understand one another better.

The forthcoming e-economy will change the way that the world does business in every respect. It will make money worth more, easier to purchase any item in any country, and make relations between businesses and consumers better, streamlined, and more beneficial to both parties. The true question of the e-economy, as I have implied earlier, is rather a question of when as to how: Already the amount of money that passes through “automated clearing houses,” or ACH transactions, each day numbers in the billions of dollars. Even though the governments of the world distribute most of this money, the government has always acted as a catalyst for change in a society.

E-Money, Part 1

Bob is a normal, average, everyday person that everyone seems to know and like. Deciding that he needs to stop by the grocery store on his way home after a rough day at the office only to pick up a few items, Bob grabs a few more items than he expected, as he always seems to do. While making his way to the cashier, Bob does a mental scan for to see if there is more cash in his pockets. Remembering that his efforts are futile, Bob stops his search: Cash money has ceased to exist. The world of the future calls for a more efficient economy: One that works on your schedule, by your rules. You are glad when you are paying for your items, because all you do is electronically transfer the necessary credits from your account to the grocery store. This transfer of credits ensures that a person does not need to hunt for cash. In the near future this will be a very plausible scenario, as economic systems move into existing in a purely electronic form. The effect of converting the current classic economy into an all-digital economy will increase the amount of funds in the system. Based on a general understanding of the mechanics of economics, this will have significant impacts on the efficiency of monetary transactions, unification of different economies, and ultimately streamline the spending habits of businesses and consumers worldwide.

Economics, in simplest form, is the “study of how people use their scarce resources to satisfy their unlimited wants,” (McEachern, 2). Resources are those things that go into producing or buying something. These include labor (the work put into it), land (someplace to do it), or time (arguably the most scarce resource of all). The ability of combining these resources and get an end product to the consumer has been what has kept modern-day society buoyant since the Industrial Revolution. This transformation in the way that countries produce goods and sell them to the consumer was felt worldwide between the years of 1760 and 1860, with the more intuitive societies feeling the full impact of the revolution (among them England and the United States). Even today, the rest of the world classifies countries on a first, second, or third –world basis. Although the global economy progressed in quantum leaps throughout the last 250 years, it was not until just before the turn of the millennium that the economy was once greatly altered.

The Internet Revolution started to transform the economy in the latter half of the Twentieth Century with the concept of the electronic data interchange entwined into the backbones of most businesses. This eventually warranted the introduction of the World Wide Web to the masses around 1990 when a group of physicists developed a graphic user interface that would have a profound impact on the masses. The group of physicists at the European Organization for Nuclear Research, the world's largest particle physics center, had the foresight that would bring the Internet to the masses and change people’s quality of life and the way everyone purchases goods and services. The Industrial Revolution changed the way we did business by streamlining many of the classic economic principles around the world—paper money, demand and supply, centralized economies; this new Internet Revolution would further streamline these principles of economics by preparing for the e-Economy.

One principle behind paying bills is the act of not paying them until shortly before they are due, otherwise known as the present value of a dollar concept. This model states that a dollar today is worth more than that same dollar tomorrow, dictated by inflation—“a persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services” (Dictionary.com). The problem with tangible money is finding the balance between “available currency” (aggregate money supply) and “available goods and services” (aggregate product supply), and therefore, increasing the effects that inflation will have on the economy. Inflation is the real purchasing power of an individual or a business to purchase a good or a service: A dollar today is worth more today than it will be tomorrow.

An inefficiency of coinage lies in the time it takes for the markets to catch up with centralized economic policy. One of the major factors in how well a nation’s economy does is the rules and regulations put onto it by the governing body at the time. In a centralized economy the government closely monitors and regulates monetary flow. If the economy is decentralized, local or regionalized markets impact monetary flow more than any governing entity. In the United States, for example, the Department of the Treasury was granted a $14.705 billion for the 2002 (U.S. Treasury 2002 Budget Summary) budget. The reason why it is attractive for governments to impose fiscal regulations is because of taxation and ultimately a good economy benefits from the amount of money that the government is going to see out of the citizens that it presides over. Of their nearly fifteen billion dollar budget, roughly 63 percent of that is earmarked for the administration of taxation activities. There are billions of dollars of waste when taxing the population under the current economic system in the U.S. According to the “Waste-O-Meter” of Freedom Works, the IRS has wasted $18.1 billion to date on such things from U.S. Postal Service waste ($1.1 billion) to Housing and Urban Development (HUD) waste ($968 million) and approximately $550 million dollars in a failed education audit. Reduction of all monetary activities would help to eliminate this waste by streamlining the centralized bureaucracy surrounding fiscal policy. Better controls would also result as the system goes completely digital. Through the utilization of an information technology infrastructure evolved from today’s infrastructure the effects of the present value of a dollar model will be made up for by the amount of waste saved. In the end all monetary transactions will be far more efficient. By ensuring that the effects of present value are negated by the effects of increased efficiency, attaining buy-in from die-hard economists will be easier. Efficiency must start, though, within the bounds of a single economic system. The European Union’s example of the Euro is an excellent concept of increasing efficiency within the boundaries of a culture.

The Technology Factor

Technology is a wonderful thing. “One machine can do the work of fifty ordinary men,” American writer, publisher, and artist Elbert Hubbard once said. The use of technology can certainly, as history has shown, be used to add more value to our daily business, squeeze more productivity out of our resources, and get more done with what we have than we might have once through possible. In the hands of the adequately skilled leader, the limits of technology are only limited to the boundlessness of creativity.

From the most basic perspective, the time savings, efficiency and commoditization of routine tasks and services allowed by computers and other pieces of technology has been able to free many the business leader to focus on the more pressing, creative, problem-solving, and desirable aspects of our trades or businesses. Computers, however, being the blessing that they are can also cause headaches or lack of productivity if they are not correctly tailored and utilized in the capacity that meets the missions of the business concern. When looking at computers, for instance:

1. Get a computer that meets your needs: Word processing? Spreadsheets? Financial management? Presentations? Personal information management? Sales management? At the very least, make sure you use a suite of programs designed to protect your computer against “malware:” The general type of malicious computer software which includes viruses, spyware, Trojan horses, and the like. While there are many programs that you pay for on the market, my experience shows that you can also achieve the same level of protection from the right mix of free programs. For instance, at home I use AVG Anti-Virus Free, Windows Defender, and Spybot Search & Destroy. This has been able to hedge against any malware problem I have on my computer at home, and what I’ve seen with others using these.

2. Organize your computer. Investing some time now on organizing your computer will very much add to your efficiency and productivity later. Be descriptive enough with your titles in order to convey your message to yourself or others. Be certain to use a system that is logical and makes sense to you.

3. Keep email short and direct when you send it. When you receive it, scan messages by subject header. Only give your email address out to people as necessary to avoid unsolicited junk or “spam” email. Designate a discrete number of times in the day, usually 1-3, to review and respond to emails. Studies have shown this to be the most productive approach.

Three ways that your computer can do for you to make your life easier:

1. Internet faxing services can remove your need to have fax machine in your office; instead, with the use of email (and possibly a scanner), you can have people fax you and you can also fax other people! These services include, but are not limited to: eFax, MyFax, RapidFax, Metro Hi Speed, FaxAge, FaxMicro, Send2Fax, and SRFax. Not sure if you want to pay? Try advertising-supported FaxZero!

2. VoIP, or Voice Over Internet Protocol, allows you to escape the confines of traditional phone plans and call anywhere using your broadband Internet connection in conjunction with your existing phone system, or simply a headset attached to your computer. The latter would find you using a program & service called Skype. The former, using your own phone system, will find you either using a local Internet provider or services such as Vonage, 1TouchTone, Verizon VoiceWing, or Lingo, for example. Want to know who ranks the best? Visit here.

3. The podcast is an excellent and efficient way to stay connected with news, opinion, and entertainment on the run. Essentially podcasts are just “radio on demand” programs from anyone with a few pieces of software to record, edit, and upload what they have to say to the Internet.

Next, how other parts of technology can play an effective part in the business leader’s everyday life.