prosperity without profits

Start A Business

Businesses make money by identifying a product or service that people need then producing and selling it for less than other businesses. Selling cars for example makes money for car dealerships which allows the dealer to purchase goods from other businesses. Business is the alternative to each person doing for themselves what they need to do to survive. Theoretically, if we all have a business or at least work for someone in a business we all have money to buy the things that businesses make and business has customers that can and will buy the products and services they produce. It is simple common sense. The economy at heart is just people exchanging goods and services, but in practice it has not been possible to ensure rational exchanges hapen, people get exploited all the time. This is nor moral nor is it rational.

A rational exchange is a trade that benefits both parties equally therefore a rational exchange produces no debt and because of this rational exchanges can be considered utilitarian or useful. Rational exchanges do not simply benefit one person at the expense of the rest of the economy so is essence a rational exchange benefits the team or those connected to the exchange. It is upon this foundation that Exchanges are modeled.

Since businesses makes things people need starting a business should not be difficult. Yet, it is one of the hardest things a person can do and generally produces large amounts of debt. This is of course because conventional business are assumed to benefit the owner and all those who are auxillary to the

The conventional way of starting a business is risky. Most start ups rely on debt and debt by its nature creats risk. This is because debt represents a threat to the owner of an asset that the asset will be taken from them if the payments on the debt are not met. Most people understand debt created by borrowing money from a bank but there are other forms of debt and risk.

The assets committed to a business start-up represent a self-imposed obligation on the business owner to recoup the investment plus a return for taking the risk. Entrepreneurs need to make money to justify the capital invested in a business. If the capital cannot be replaced eventually the business will have to be liquidated possibly at a loss. Capital is in one sense a debt the business owner owes to him or her self.

Business start ups always poses a risk because they always represent a potential loss. The investment may not pan out. If the business person does not have the necessary skills to make the business work the effort to make money may result in the loss of everything the owner has. Business capital is a debt owed to the business owners. If the business is not profitable the capital is not recuperated as a ROI.

Risk always exists as a claim on assets and as a threat directed at the assets.

Exchanges eliminate the risk and expense of starting a business because Exchanges use a team approach. Team Work eliminates the speculative aspects of starting a business.

The secret to eliminating risk is to equitize the debt that underlays all risk. This means the negative money of debt is transformed into positive equity in an Exchange because an Exchange represents team work. An asset that is owned by a common entity cannot be lost to one part of that entity.

To experience a working model of this idea read about how to buy the best beef for less using the Exchange way of doing business.

Exchanges: 

Conventional businesses need every cost they encounter to contribute something to the bottom line. If the action does not create added value then the action is a drag on profits and is likely to be discontinued as soon as identified.

In conventional business strategy charity is a cost to be justified by its contribution to the bottom line, even if the reason is convoluted. Business do not, theoretically at least, just spend money  for good causes because the only truly good cause is making money. Every cent spent must be justified by its ability to contribute something to the bottom line.

Exchanges embody the team concept. As such an Exchange starts with people who come together to help one another in a specific way. In this sense an Exchange is a team business or team based business.

An individual entrepreneur may need space in which to work or from which to sell product or services. This can be an insurmountable problem for an individual working in a debt constrained market. Debt always poses a degree of risk as no one knows for sure if the loan plus interest can be liquidated. Leasing business space in conventional terms equates to making a loan of property to a business.

Exchange alter the focus and the perspective of businesses because it is not the profitability of an individual business that is paramount it is the success of the team. Exchanges look at business from the perspective of a team.

When space is provided in a conventional business environment risk is created for both the rentier and the renter. Renting space puts both parties at risk. The renter must find the rent money or lose the space and the landlord has his property tied up by someone who may or may not become insolvent.

But when people start a business as a team using the Exchange model risk is eliminated. Rent is paid by the Exchange to the owner of the space leased and the rent is paid to the Exchange by the leasee as a claim on the equity of the Exchange. The Exchange absorbs the risk by turning the asset represented by the leased space into equity in the Exchange. This effectively liquidates risk because it eliminates the debt on which risk is based and consequently eliminates the possibility of default.

If an entrepreneur needs tools or equipment these are purchased from members using equity in the Exchange. The purchaser trades equity in the Exchange for tools and the Exchange pays the  owners of the tools by transfering equity to their accounts. The equity is based on and backed by the asset represented by the tools.

Exchanges are a new way of organizing flat networks by the use of Moral ir Exschange generated Money. Money is in essence simply an accounting tool used to track what one person does for another in an objective and quantified way. The acounting process provides credit to buyers and sellers to facilitate transactions. Money serves to formalize transactions and create a clearing house for transaction made between members. Transactions consists of transfers of equity in the Exchange. The relative ownership of the Exchange shifts as assets are traded back and forth mirrored by shifts in equity. The total assets of the Exchange always covers the equity and the accounts of the members always balance. Credits always equal debits.

Contact Rational Exchange about starting an Exchange. Rational Exchange helps set up Exchanges in return for an equity position thus eliminating the need for  capital or debt. Eliminate the need for conventional forms of money. Eliminate speculative bubbles. Talk to us today.

Benefits:   

By eliminating the need for debt business owners no longer need to multitask beyond what they are comfortable with nor do members face the same costs as conventional business start ups so there is always less risk.

Member businesses no longer need sales persons. Exchanges let people start businesses on the strength of what they have and know and can do. It actually benefits those in a moral market to buy from others in the network.

In conventional terms a person has two options when starting a business. She or he may ask investors to supply capital or they must supply the capital themselves. Both options pose considerable risk. In an Exchange it benefits people to help others including helping them set up a business. This makes setting up an Exchange a relatively simple and cost free option. People are benefitted when they assist the process.

In the conventional process of setting up a business banks or other investors finance an entrepreneur if the investment will pay more than other alternatives and if the risk is within an acceptable range. From the banks standpoint there is always a risk the borrower will default. Investors concern is not to help the community or the entrepreneur but to profit on the investment.

The third option is to monetize a network in other words set up an Exchange. A network may be in informal social network, an existing business network or a community network. Exchanges create a moral currency that allows those in a network to exchange goods and services without risk. The New Morality enables businesses to be set up without capital or experience because Exchanges create moral economies out of existing networks (referred to as the Monetization of a Network) to make them effective wealth generators.

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