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Expert Answers to Biz Questions
Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.
How Small Businesses Can Learn From Spread Betting the Markets
Owners of small companies may be forgiven for thinking that whatever affects multinationals and wider economies will not have much impact on them. However, that is not often true. The fortunes of a currency, stock market or major business can affect all kinds of areas of your business.
A major business with an upcoming quarterly report may determine how much you pay for supplies. An interest rate change or big fall in a major stock exchange’s value could do good (or harm) to your business. To know how this works, it is worth learning about what makes the markets and other financial stats tick.
Monitoring Bigger Rivals
If you are in an industry where there is at least one multinational, looking at their performance on the stock exchanges will be really helpful. Insurers may want to look at the Direct Line Group, whose shares fell by nearly 10% in the space of a month from August to September. This may be a sign that demand for insurance products is on the wane, affecting your business.
If shares in bigger companies are rising, it shows that investors are confident that their industry is set to grow. You need to know when to take advantage of such a move - make sure you know why people are investing into your bigger competitors and see what it is you can do differently.
Testing your Trading Skills
Understanding the currency markets will help improve your business nous. Knowing how much your money is actually worth can aid any trading you do with other countries e.g. selling in Euros from the UK. Trying spread betting will enable you to monitor changes in currency values, giving you the opportunity to react to them.
In addition to that, you may be able to make money from it. As a sideline, getting a trade correct could yield a big profit, as spread betting is a leveraged product. You need to do your research beforehand though.
Checking Suppliers’ Fortunes
Finally, you should check out how your suppliers are performing. If you go to a big multinational for your technology, stationery or any other supplies, any sudden dip or peak in their share price could impact on how much you can expect to pay them.
If a company’s share price collapses following a major profit warning, it may suggest that said company is close to liquidation or a big loss. The BT Group’s poor performance on the FTSE 100 index this year is down to a major profit dip. For any of their broadband customers, this could mean a price rise.
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