Google Gadgets, Yahoo Widgets & Myspace Widgets – Social Media Marketing On Demand

Remember the film “Field Of Dreams” and the tagline “If you build it, they will come?” Well, the same goes true for a Google Gadget, MySpace Widget or Yahoo Widget. Social Media Marketing and Viral Marketing are the crux of the online industry. Create a great looking website, fill it with informative content and useful information and viola – you have something that people will want. Something people will even be willing to pay for.

The trick is to get them to see your website. This is where viral marketing and social marketing come in. It is amazing what a few simple tricks that you can learn on the internet can do for your business. Creating a Google Gadget or a Yahoo Widget is not difficult at all. These are little bits of code that can be implanted in text. Because they are attractive little photo codes, they are appealing in text and can be put just about anywhere. Many people use these as their signatures on forums and blog posts to draw attention to their websites. They are very, very effective marketing tools and not difficult to create.

There are several tutorials online about how to create a widget or gadget. The first thing you need to understand is that this will connect to a website. Every time the website updates, the text that you use can update. A widget or gadget can be used in many different ways. For the most part, however, they should be used as a way to update information.

If, for example, you connect your widget to the weather channel, and you incorporate it into text into your website, your website will be updated every time the weather changes, which is often. This can continue to keep your website updated and at the top of RSS feeds.

If you change your website frequently, you will want to build a gadget or widget connecting it to your website. Again, with every change, the widget will automatically reflect that a change is being made. If you have subscribers to your website, even if it is a social page on MySpace, anywhere you post the widget online will continually update each time you change your MySpace page.

Think of what you use in your business that repeats often. Instead of constantly notifying people that you have a new shipment of a certain product, for example, you can incorporate a Google gadget into something like a subscriber link and have it automatically update each time you change your website. You can spread the links all over the internet, on bookmarking sites as well as social networking sites and the sky is the limit.

Building a Yahoo Widget, MySpace Widget or Google Gadget is simple and fun. There are fun tutorials that teach you how to complete this task. Just think about what you want to do with the gadget or widget and how you want to use it. Then log onto the Google, Yahoo or Myspace and follow the prompts. Then you can start building it.

Why Use EBITDA Instead of Net Income When Valuing a Business?

When calculating the value of a business most valuations rely on a multiple of EBITDA instead of a multiple of profits. Occasionally, a buyer will object, saying that his return will be after taxes, interest, and depreciation so the profit figure should be used instead of EBITDA. The reason that approach does not work is that the cost of the items that are backed out in EBITDA depend on the sellers circumstances and may be quite different for the buyer.

Let’s look at an example. Assume that we have two businesses (A Widget Inc. and B Widget Maker). Each of the two companies produces the same number of identical widgets, which they sell for the same price, using a machine that cost $2,000,000 and each financed the machine using a bank loan. Because of their credit histories the first company pays 5% on the loan while the second company pays 15%. A Widget Inc. is a sole proprietorship and so shows no corporate taxes on its income statement but B Widget Maker is a C Corp it is paying $100,000 in corporate taxes. Our two widget companies occupy identical buildings, side by side. A Widget Inc. acquired their building a decade ago and this year will be able to take only $100,000 in depreciation. B Widget Maker acquired their building only one year ago and because of the high purchase price will be able to take $400,000 in depreciation on this year’s income statement.

Let’s look at the income statements for these two companies:

……………………………. A Widget Inc……….B Widget Maker

Sales…………………………5,000,000……………..5,000,000
Cost of Goods Sold……..2,000,000……………..2,000,000
Other Expenses*…………1,000,000……………..1,000,000
EBITDA……………………..2,000,000……………..2,000,000
Interest……………………..100,000…………………..300,000
Taxes……………………………….0……………………..100,000
Depreciation…………………100,000…………………400,000
Profits………………………..1,800,000……………..1,200,000

*All other expenses except Interest, Taxes, and Depreciation.

In our simplified universe, based on the excess earnings method of valuation, A would be worth 50% more than B (since 180,00 if 150% of 120,000). But let’s look at what happens to their earnings after you acquire them.

You are going to refinance the machines. Your credit history is better than B’s but you are unwilling to pledge your house as collateral (which A did to get his low rate) so in both cases you could get a rate of 7% (making the interest only payment on the loan $140,000). In both cases you will mark up the value of the building to fair market value, on which you’ll be able to take $450,000 in depreciation. Your company is organized as a C Corporation, and you project taxes on the additional profits at $80,000. Post acquisition, in either case your profits are identical.

So, you ask why not pay on a multiple of what you project your EBITDA would have been? You may internally calculate the rate of return that you’d like to see after non-cash expenses but talking to a seller about your taxes, methods of depreciation, and financing costs is never a good idea. and remember that if you are calculating a multiple based on profits and you want to close deals you’ll need to make the multiple higher since other buyers will be basing theirs on EBITDA.

Finally, I want to add a note about depreciation since with this non-cash expense the problem becomes a little more complex. There is a great deal of latitude in choosing what depreciation method a company uses and often the useful life that is assumed for depreciation is not an accurate reflection of the real world. You certainly do not want to value a company more highly simply because it chose a less aggressive depreciation schedule. In some circumstances, however, depreciation may represent a reasonable approximation of a real expense. I have, for example, seen buyers in the non-emergency medical transportation business who used a seven year depreciation schedule as a proxy for the cost of replacing a fleet of vehicles, which they decided was necessary roughly every seven years. In those cases I have seen buyer and seller agree to talk in terms of EBIT.

Why Widgets Work Wonders for Your Website

Widgets are the Internet’s answer to “knowledge on demand”. They are icons that give you easy access to information and areas of interest. Widgets are versatile tools that can be placed on websites, desktops, blogs, profiles and even mobile devices. Users can access and interact with the information they need for news, entertainment, weather, blogs, the stock market or any other area of interest.

Today’s Internet users expect more from a website. They want it to be proactive, drive traffic and develop more incoming links. Widgets help do this and more. These Internet “gadgets” are a great way to market your site and make it come alive. If you place widgets on your blog or homepage, visitors will be able to download your widgets to their desktop or add them to their personal sites. Another great thing about widgets is that they are viral and allow users to share and download them through their friends’ sites. With widgets, you now have a website that is more interactive with a tool that contains valuable information, is viral and creates more inbound links.

FaceBook, for example, revolutionized their site by recently adding the Facebook Platform in May 2007. Now booming, Facebook widgets range from political campaigns to zombie bites (a community widget that allows friends to bite and turn each other into members or “zombies”). Because of widgets like these, Facebook has attracted more people and more advertisers. Other sites that have used widgets to their benefit include PhotoBucket and MySpace. Like the big boys, savvy webmasters are jumping on the widget bandwagon and using it for their customers benefit.

As long as you keep your widget useful and simple, they will drive traffic to your sites and work to promote your products and services. Widgets are cheap and effective ways to promote your business through direct response web marketing and through social networking.