XYRM Innovation: 11/04/13

How Automation is Helping Investors With Trading Strategies

Ever since the financial crisis, people have become more risk averse.Â Nirvana Systems through its new product, OmniVest, is addressing the need of active traders to continue playing in the market with managed strategies delivered online.

OmniVest is a fully automated user-driven investment system that uses the software-as-a-service (SAAS) model. It enables users to make informed decisions and implement multiple trading strategies, using historical performances. Users can opt for subscriptions to the companyâ€™s acclaimed strategies, which are then combined to form a portfolio of strategies. Some of its highly acclaimed strategies include the RTM7, the T3 Strategy Suite and the NSP-41 strategy, which have consistently beaten the market every year since 2000.

It is the combined power of a portfolio of such strategies that forms the basis of the automated trading system. This new product keeps the user or investor in the drivers seat, letting them configure the trading account for growing investments, while enforcing counter-risk strategies.

Founded by Ed Downs in 1987, Ed is an engineer by training and had specialized in Design Automation. This interest in automation led him to experiment with the stock and options markets and ultimately start the company to develop automated trading technology solutions for individual investors and brokers.

Its flagship products include OmniTrader and VisualTrader trading platforms as well as the MarketScans software. The underlying dominant theme for the companyâ€™s products and development efforts has been to help traders make more money in less time with less effort.

However, the 2008 market decline was a particularly traumatic experience for the company. The reduction in trading volumes led to a dramatic rise in cost of sales and increased competition. This pushed the company to reinvent itself and that is what has ultimately led to the OmniVest product.

The product was released as a paid beta to its customer base in October 2012. Since then, the company has sold $1.2 million in subscriptions. The subscription includes an automation program called The Trade Processor which allows subscribers to connect the product to their live brokerage accounts.

Their competitors include companies that provide â€˜Mirror Tradingâ€™ in non-broker individual investor accounts, such as Currensee as well as companies that provide strategies for rent, like Collective2 and The Machine. Of these, The Machine is the only competitor that offers a portfolio of strategies.

Ed maintains that their approach is quite different from that of The Machine and that its users find the returns from their product superior to those from The Machine. A recent survey conducted in May 2013 by the company showed that over 80% of the respondents were making money and the average annual rate of return was 56%.

The company completed OmniVest as a â€œMinimum Viable Productâ€ in March 2013 and is now enhancing it with more strategies. To accelerate revenue growth and complete its transition from a trading software company to a software-as-a-service company, they are looking to partner with brokers. OmniVest generates revenue for brokers by automatically trading the userâ€™s selected strategies, day after day, with no further input required.

The need of the hour in the trading sector is to innovate and provide solutions that address important current issues. And OmniVest strives to deliver by leveraging brokersâ€™ existing customer bases to increase trade volumes and commission revenues, offering low-risk trading strategies.

SAAS Photo via Shutterstock

Study Suggests That Privately Owned Companies are Better Innovators

Itâ€™s easy to believe that large publicly funded companies are more innovative than their privately owned counterparts, including small businesses.Â But one study from researchers at the Wharton School, University of Pennsylvania and international business school INSEAD suggests this may not always be so.

In the study (PDF),Â Entrepreneurial Exits and Innovation, researchers followed 460 biotechnology firms, all venture-capital funded and founded between 1980 and 2000. The study measured innovation based on the number of patents each company filed.

The study found that privately run companies had the highest level of innovation. Meanwhile, companies that had been taken public had the lowest. And private companies taken over by public firms were somewhere in between.

In a post on The Wharton Schoolâ€™s official blog, Wharton management professor and researcher David Hsu speculated too much public pressure plus the pressure to report to stock holders caused the problems. He added:

If you can stay private, you feel free to experiment more. No oneâ€™s going to find out whether what youâ€™re trying to do is successful or less successful. You can aim for the fences more.

Meanwhile, in the same post Hsuâ€™s co-researcher, Professor of Entrepreneurship and Family Enterprise at INSEAD Vikas A. Aggarwal observed:

You will have a shift in the types of projects you select. In a public setting, you have a much lower ability to take on riskier projects; you lower your tolerance for failure.

Small businesses do not take venture capital and few have ever considered taking their businesses public, or even would if they could. Still, the results make sense when we think about the motivations small businesses have for sometimes rejecting outside money and the interference that can come with it.

One problem with raising funds for your business is that itâ€™s easy to let your focus drift. You may begin worrying more about existing or potential investors than about serving your customers.

Focus on delivering products and services your customers will love. Thatâ€™s often what leads to innovationâ€¦and to a thriving business too.

Innovation Photo via Shutterstock

5 New Tax Laws That Can Cost Business Owners Dearly

The 2013 tax year is coming to a close, but business owners, most of whom pay taxes on business profits on their personal returns, may be unaware of some new tax laws that can increase their tax bill for this year.

Make sure you arenâ€™t caught off guard and have the new tax laws into account when figuring income tax withholding (if you and/or your spouse receive wages) and estimated taxes so you wonâ€™t be penalized.

Familiarize Yourself With The New Tax Laws

1.Â Â Â Additional Medicare Tax on Earnings

If your earned income is high enough, youâ€™ll pay an additional 0.9% Medicare tax. This is on top of the Medicare tax paid as part of FICA or self-employment tax.

The tax applies to earned income over a threshold amount (modified adjusted gross income of $250,000 for joint filers; $200,000 for singles). Thus, if you take a salary of $100,000 from your S corporation, you wonâ€™t pay this tax.

But if you have a sole proprietorship that shows a profit over your threshold amount, youâ€™ll pay 0.9% on the excess (e.g., if youâ€™re single and your profit is $225,000, youâ€™ll pay $225 [0.9% of $25,000]).

There is no employer matching for this tax. Self-employed people pay a single 0.9% tax; itâ€™s not doubled as in the case of self-employment tax.

2.Â Â Â Additional Medicare Tax on Net Investment Income

Investment income minus investment-related expenses may be subject to a 3.8% additional Medicare tax, the first time that Medicare tax has been applied to anything other than earned income. This is called the net investment income (NII) tax and it applies to the lesser of net investment income or modified adjusted gross income (MAGI) over a threshold amount for your filing status. The same threshold amounts for the additional Medicare tax on earnings applies to the NII tax.

When it comes to business income, if you materially participate in your companyâ€™s activities, then distributions arenâ€™t treated as investment income. But if youâ€™re a mere investor, distributions may be subject to this tax. Whether the tax applies to gains on the sale of a business depend on how the business is organized and your participation in it.

3.Â Â Â Phase-Out of Personal Exemptions

There is a personal exemption phase-out (called the PEP limitation) that can cause you to lose some or all of the exemptions for you and your dependents. Personal exemptions are phased-out by two percentage points for each $2,500 ($1,250 for married persons filing separately) that your adjusted gross income (AGI) exceeds a threshold amount.

The threshold amount varies according to your filing status. Say in 2013, you and your spouse have two dependents. Ordinarily youâ€™d deduct $15,600 ($3,900 x 4). But if your AGI is high enough, you lose this write-off entirely.

4.Â Â Â Reduction in Itemized Deductions

Called the Pease limitation after the Congressman who initially created the rule years ago, it means you can lose up to 80% of your itemized deductions if your AGI is high income. The limitation means that your itemized deductions are reduced 3% of the amount by which your AGI exceeds the same threshold used for the PEP limitation.

The only break: medical expenses, investment interest, casualty and theft losses, and wagering losses are not subject to this limitation. But your deductible taxes, other interest, miscellaneous deductions, and charitable contributions may be reduced.

5.Â Â Â Higher Tax Rate

For more than a decade, the top tax rate on individuals has been fixed at 35%. Whatâ€™s more, you paid no more than 15% on long-term capital gains and qualifying dividends. For 2013 and beyond, that has changed.

The top rate is 39.6% once your taxable income exceeds a threshold amount that varies with your filing status. Sure, the threshold is high, but a great business year can put you over it and trigger the high rate on ordinary income as well as on long-term capital gains and qualified dividends.

What To Do About The New Tax Laws

Meet with your tax advisor to review your tax picture and find out which of these new tax laws, if any, applies to you.

Then explore strategies you can use to minimize or avoid the new tax laws and keep your tax bill as low as possible.

Tax Photo via Shutterstock

Report Indicates Twitter And Pinterest Are Driving Greater Sales Revenue

The next time you attend a seminar where someone says social media doesnâ€™t drive sales, just ignore it.Â Though some conventional wisdom says social media is for networking and boosting brand awareness only, a recent study suggests we should all take another look at this assumption.

The Q3 Social Intelligence Report from Adobe indicates (PDF) social sites like Twitter, Pinterest and Facebook arenâ€™t just driving revenue. They are driving larger and larger amounts of it year over year, whether you count the first click or the last click customers make before a sale.

Of the three, Twitter saw the greatest increase in revenue per visitor over the last year while Facebook saw the least.

Specifically, the report concludes that:

Twitter saw a 300 percent increase in revenue per visitor.
Pinterest saw a 150 percent increase.
Facebook saw a 39 percent increase year over year.

Of course, this only amounts to about 93 cents per visitor for Facebook, 55 cents per visitor for Pinterest and 44 cents per visitor for Twitter as of September.

But experts say with the low cost of social media marketing and the ever increasing revenue being generated through customer referrals, itâ€™s a resource businesses cannot afford to ignore.

Still, many businesses continue to undervalue social media marketing, particularly advertising, Venture Beat reports.

Thatâ€™s because social media referrals are often only the beginning of the sales process. But with sales revenue generated by these referrals continuing to increase, it is probably not a step your business wants to skip.

Sales Photo via Shutterstock

5 Small Business Security Tips for Keeping Your Business Safe

Data security isnâ€™t the only concern for small businesses today. Office parks and retail shops are prime targets for criminals, especially when those businesses fail to put adequate premises security in place. Small businesses should investigate premises to ensure the safety of workers, as well as the security of a buildingâ€™s contents, especially if that business operates a warehouse filled with months of inventory. One break-in could wipe out months of inventory, potentially costing a business hundreds of thousands of dollars.

ADTâ€™s president of small business, Luis Orbegoso, has noticed small businesses are more likely to lack the security measures that can deter break-ins. Through ADT Pulse, ADT offers security tailored specifically to the needs of businesses. But he also points out several small business security tips for a business to keep criminal activity at bay.

Lighting-Orbegoso stresses the importance of adequate lighting at all entryways and exits of a building. Businesses should also leave a few interior lights on at night, Orbegoso says, to give the appearance that someone might be inside. A motion detector can help capture movement on a property, while also preventing false alarms.
Doors-Ideally, a businessâ€™s doors should be constructed from a sturdy material such as solid wood or metal lining. For businesses with garage doors, those doors should be secured with padlocks. Any glass or panels on those garage doors should be reinforced to prevent them from being broken.
Windows-To minimize vulnerability, Orbegoso suggests covering all windows with burglar-resistant glazing. Businesses should also check to ensure locks canâ€™t be reached by breaking a window. If there are any unused windows, Orbegoso finds that placing equipment or heavy merchandise in front of those windows can deter crime.
Key Management-Orbegoso tells business owners to give keys only to essential personnel. Each key should be numbered and coded for tracking purposes and, in the event a key should be reported as lost, business owners should have all corresponding locks changed.
Exterior-A business owner should also take a look at the exterior of a property, keeping it as clean, uncluttered, and well-lit as possible. Orbegoso recommends exterior security cameras to record activity. He also says property owners should limit shrubbery, since it could be used as an intruderâ€™s hiding place.

These changes can make a big difference, not only in a businessâ€™s security but in workersâ€™ peace of mind. Small businesses are susceptible to both initial burglaries and re-burglaries, which can drive insurance premiums up and hurt employee retention.

5 Small Business Security Tips for Keeping Your Business Safe

Lighting-Orbegoso stresses the importance of adequate lighting at all entryways and exits of a building. Businesses should also leave a few interior lights on at night, Orbegoso says, to give the appearance that someone might be inside. A motion detector can help capture movement on a property, while also preventing false alarms.
Doors-Ideally, a businessâ€™s doors should be constructed from a sturdy material such as solid wood or metal lining. For businesses with garage doors, those doors should be secured with padlocks. Any glass or panels on those garage doors should be reinforced to prevent them from being broken.
Windows-To minimize vulnerability, Orbegoso suggests covering all windows with burglar-resistant glazing. Businesses should also check to ensure locks canâ€™t be reached by breaking a window. If there are any unused windows, Orbegoso finds that placing equipment or heavy merchandise in front of those windows can deter crime.
Key Management-Orbegoso tells business owners to give keys only to essential personnel. Each key should be numbered and coded for tracking purposes and, in the event a key should be reported as lost, business owners should have all corresponding locks changed.
Exterior-A business owner should also take a look at the exterior of a property, keeping it as clean, uncluttered, and well-lit as possible. Orbegoso recommends exterior security cameras to record activity. He also says property owners should limit shrubbery, since it could be used as an intruderâ€™s hiding place.

5 Small Business Security Tips for Keeping Your Business Safe

Lighting-Orbegoso stresses the importance of adequate lighting at all entryways and exits of a building. Businesses should also leave a few interior lights on at night, Orbegoso says, to give the appearance that someone might be inside. A motion detector can help capture movement on a property, while also preventing false alarms.
Doors-Ideally, a businessâ€™s doors should be constructed from a sturdy material such as solid wood or metal lining. For businesses with garage doors, those doors should be secured with padlocks. Any glass or panels on those garage doors should be reinforced to prevent them from being broken.
Windows-To minimize vulnerability, Orbegoso suggests covering all windows with burglar-resistant glazing. Businesses should also check to ensure locks canâ€™t be reached by breaking a window. If there are any unused windows, Orbegoso finds that placing equipment or heavy merchandise in front of those windows can deter crime.
Key Management-Orbegoso tells business owners to give keys only to essential personnel. Each key should be numbered and coded for tracking purposes and, in the event a key should be reported as lost, business owners should have all corresponding locks changed.
Exterior-A business owner should also take a look at the exterior of a property, keeping it as clean, uncluttered, and well-lit as possible. Orbegoso recommends exterior security cameras to record activity. He also says property owners should limit shrubbery, since it could be used as an intruderâ€™s hiding place.

Incorporated Versus Unincorporated Self Employment

The U.S. Census Bureau produces a wealth of data on self-employed Americans. This information is useful to a host of people, from policy makers, to researchers, to marketers, to people who simply want to be educated.

However, understanding the data requires those using them to be aware that they discuss two different types of self employment:

Incorporated self employment: Refers to people who work for themselves in corporate entities.
Unincorporated self employment: Refers to people who work for themselves in other legal entities.

The most important difference between incorporated and unincorporated self employment lies in their commonality. Many more Americans are unincorporated self employed (6.1 percent of the labor force) than incorporated self employed (3.5 percent of the labor force). This difference in frequency means that any discussion of all self employed workers requires properly weighting the two groups of self employed.

They Differ on Two Important Economic Dimensions

The Incorporated Self EmployedÂ Earn Much more

In 2011, the median earnings of the incorporated self employed were $46,872, while the median earnings of the unincorporated self employedÂ were less than half that - $21,630.

The Incorporated Self EmployedÂ are More Likely to Have Health Insurance

In 2011, 83.6 percent of the incorporated self-employed, and 68.7 percent of the unincorporated self employed, had some type of health care coverage.

They Have Very Different Demographics

Incorporated Self EmployedÂ are Much More Likely to be Male

In 2012, 76 percent of people over 16 and self-employed â€œfull-timeâ€ and â€œyear-roundâ€ in incorporated businesses were male, while 24 percent were female. For unincorporated self employment, the numbers were 68.1 percent and 31.9 percent, respectively.

Incorporated Self EmployedÂ are More Likely to be White and Asian

In 2011, 79.4 percent of incorporated self employedÂ workers and 72.3 percent of unincorporated self employedÂ workers were White, while 6.6 percent of incorporated self employedÂ workers and 4.6 percent of unincorporated ones were Asian.

The Incorporated Self EmployedÂ are More Likely to be in the Middle of the Age Distribution

In 2011, only 5 percent of the incorporated self-employed were under 30, as compared to 9.9 percent of unincorporated self employed. At the same time, 9.8 percent of the incorporated self employedÂ were over 65, versus 10.4 percent of the unincorporated ones.

The Incorporated Self EmployedÂ are More Likely to be American Citizens

In 2011, 93.9 percent of the incorporated self employedÂ and 88.6 percent of the unincorporated self employedÂ were citizens.

The Incorporated Self EmployedÂ are More Likely to be Married

In 2011, 75.4 percent of the incorporated self employedÂ and 62.6 percent of the unincorporated self employedÂ had spouses.

The Incorporated Self-Employed are More Likely to be Proficient in English

In 2011, 7.7 percent of the incorporated self employedÂ â€spoke English less than â€˜very well,â€™â€ while 12.9 percent of the unincorporated self employedÂ fell into this category.

The Incorporated Self EmployedÂ are More Highly Educated

In 2011, 44.5 percent of the incorporated self employedÂ had a Bachelorâ€™s degree or higher, as compared to 29.9 percent of the unincorporated self employed.

Unincorporated Self EmployedÂ Workers are Slightly More Likely to Work at Home

In 2012, 17.6 percent of incorporated self employed, and 23.2 percent of the unincorporated self employed, worked from their dwellings.

The Incorporated and Unincorporated Self Employed Tend to Work in Different Industries and Occupations

The incorporated self employedÂ were significantly more likely than the unincorporated self employedÂ to report working in management (49.5 percent versus 33.9 percent) and sales (23.5 percent versus 15.8 percent) occupations in 2011.

Incorporated Self Employed Were Likely to Work in:

Manufacturing
Wholesale trade
Retail trade
Finance
Insurance and real estate
Professional and scientific services
Arts
Entertainment
Recreation

They Were Less Likely to Work In:

Agriculture
Forestry
Fishing and hunting
Construction
Educational services
Health care and social assistance
Other services

Most of this information is available in one place or another on the Census Bureauâ€™s website.

However, it isnâ€™t compiled in one place where readers can easily see the difference between the two groups of self employed people.

Self Employed Photo via Shutterstock

Uber Offers You â€œGreenâ€ Options for Hassle Free Business Travel

Cutting down on travel expenses, even if itâ€™s to a meeting across town, is still important for small businesses. And sharing a ride is a way to cut down fossil fuel emissions.

In this respect, companies like Uber and other â€œonline-enabled transportation systems,â€ as they are now being called, are green businesses themselves.Â But they can also enable other businesses using their services to become more green too.

Uber began as a service allowing people to call luxury cars to pick them up in San Francisco. Customers use the Uber app on their smartphoneÂ to connect with a ride.Â But soon the service had spread to many other cities and the companyâ€™s website now says you can use the Uber app to call a driver in 20 countries around the world.

More Vehicles, More Small Business Owners

Uber drivers have begun to expand their fleet to include SUVs, hybrid cars and even taxi cabs.Â Uber drivers are small business owners who connect with their clientele through the app and sign up with Uber to participate.

As part of their participation, drivers must meet Uberâ€™s standards for customer service and are rated by previous riders and licensed and insured in accordance with local regulations.

Some worry they are competing with another group of potential small business owners, traditional taxi drivers, who are considerably more regulated.Â But even critics concede the barrier of entry for Uber is low as far as small business startups go.

Hassle Free Business Travel and A Greener Ride

With the launch of the new UberX app this year, the company has introduced a fare splitting concept allowing people with similar destinations to connect and share expenses.

Imagine small business owners with similar regular destinations sharing expenses and also contributing less greenhouse emissions while traveling?

Of course, not everyone is convinced.Â In a recent post in Environmental Leader, Lori Anne Dolqueist and Tara S. Kaushik insist the jury is still out on Uberâ€™s status as a greener travel option. They point to huge efforts being made by traditional taxi services to become more fuel efficient.

It may be true that not all Uber drivers are currently using fuel efficient hybrids. But itâ€™s hard to understand how splitting a ride for hassle free business travel wouldnâ€™t benefit the environment as well as your budget.

Image: Uber