Small Businesses are an excellent investment that typically yield 100% to 500% returns. As Hayden Advocates in “The Million Dollar Mentor” small business is not a place to seek fortune. His opinion is that the self employment avenue is a fallacy. Something people with no plan or concept of earning a million dollars in a specified number of months will do in a vain attempt to buy themselves a job. (Well he is a hard realist) Its a mistake to see it as the way to financial independence UNLESS it proves to be VERY lucrative and just not worth selling.
Very few small businesses qualify for this decision. So the lead here is not to get involved in the first place. The lead is to buy and sell these entities. As there definitely IS a fortune to be made trading these assets.
Amazingly there is a steady stream of buyers of these hard work-small return endeavours. People buy for their own reasons and its not up to us to question their reasons. As opportunity investors we work to provide people with what they seek at prices they are willing to pay. (For the businesses you have built for little money and time or the businesses you have quickly turned around and resold)
Most people would like to be self employed for two reasons. They would like to tell their boss goodbye. The other reason is usually found in some vague notion of a payday in some future undefined time. Hayden talks about this in the “Mentor” and discusses how self employed people simply buy themselves the “benefit” of “management headaches” for little recompense.
There are two compounding avenues to take with small business.
Small business investment is very lucrative because like Residential Real Estate, many of the sellers are non-professionals. They may have basic business skills but don’t understand the value of their proposition which leads to deals for below intrinsic value. They typically sell their businesses for 70 cents of $1 of value or they tend to pay $1 for 70 cents of intrinsic value when buying existing small businesses. This is their individual choice and the target of our activities.
Many of these business operators are cash flow investors who mistakenly include their own labour as part of the cash flow equation. Understand? A cash flow investor will look at a business that returns $50,000 net profit (after costs of doing business) and will be willing to pay $100,000 for it because they reason they will have their money back in two years. On the surface, this may sound reasonable. After all as an opportunity investor that’s 50% profit per year.
When you include the cost of your own time and labour into the equation, you really aren’t doing that great at all. But what they really fail to grasp is that the asking price is arbitrary and based on earnings, this $100,000 was fictitious until the buyer makes it real.
So the two leads are
2/ converting low priced assets into high priced assets.
When you find a demand in any particular area, you recognise that you have a potential business. If existing supply fails to meet that demand adequately, you stand to compound your seed capital dramatically. This is where you will find those rare beasts, businesses that you shouldn’t sell for a quick return because they are just so lucrative. An example of a current demand that is not being met is in the after market automotive industry. The area is booming as people tend to modify their vehicles to their own requirements. The existing supply (businesses that cater to this need) is not keeping up.
This particular segment is very interesting, it has been booming for years and shows no signs of softening. The phenomenon is being witnessed right around the world. The automotive revolution is spanning the globe and continues at an exponential rate.
Aftermarket sales is just being ignored by big players who are focusing on larger meatier segments of the general automotive industry.
There is a defined opportunity here for the opportunity investor that may last decades and beyond. Start businesses in the after market automotive industry and sell them 2 at a time.
In particular, what is interesting is the automotive tint industry which seems to be very lucrative and in high demand. Truly a winning combination. Its lucrative because the cost of tint film is a few cents, but the cost of the service is hundreds of dollars per car.
Explanations of the demand can be found in the current alarm about global warming and the green house affect. The damage the sun does to exposed skin and retinas is very motivating for many people who are willing to shell out for the protection tint film provides for their family.
Because of the cheapness of the tint film, there is an opportunity to start up with little money exposed. There is some other things you may need but the cost could be very low if you approached it right.
2)Converting low cost assets into high value assets.
This is the traditional “re-hab” approach. Just like in Real estate you can buy cheap and sell high, just by buying small businesses in distress which have “obviously repairable problems”. This is where the vision is. As a professional you apply your knowledge of the specific area you pick and review businesses for sale in that area. You identify the profit and devise the way to extract that profit. Of course, here you will need access to funds, whether borrowed or saved.
As a small business entrepreneur, your only interest in them is to resell them rapidly for a profit. This is where the capital gains is, this is where the rapid wealth is.
Four Pillars of Creating Wealth By Yochention Saritoh – nicola wealth management
Some people in this world are thinking that their poor financial condition today is their destiny. They keep telling themselves that they?ll never get rich in this lifetime. Are you one of those people? If you are, it?s a good thing that you find this article, because I want to personally give you four pillars of creating wealth that are being done by many rich people in this world.
These rich people just know how to get out of their financial problem and start to create wealth. They are just like the rest of us, they don?t have a special talent, and they are not good looking people or movie star either.
So, you start to wonder how they can become wealthy, rich and even financially free.
Here are the secret they know that most of us have heard about. The problem is laid on all of us. We usually just let the information passing us, and we don?t do anything about those information. Now, it?s the time for me to remind all of us, and start to do something about it.
The first pillars that we might want to do is own a business. Here is the tricky part, owning a business give you a financial freedom, but it also can give you a new headache. What I meant is that every one of us needs to run the business that has a system. This system has to be created in such a way that make the business can run without the constant intervene from us. I will suggest you to read an excellence book about it called ?E-Myth revisited? by Michael E. Gerber.
If you want to start with a business that already has proven system, you might want to consider a franchise. A good franchise usually will provide you with a proven working system to their franchisee. So, the franchisee can start their business smoothly and quickly.
The next one on the list will be real estates. A lot of American nowadays is enjoying a big raise on real estates value in the past couple years. Some of them have multiply their asset by double in these couple years alone. The tricky question is how they know that their property value will be going up. Well, the answer is they don?t know either. It?s just a pure luck, that?s what I think. This won?t make anybody to achieve financial freedom.
What can make everyone to achieve financial freedom in real estate is by buying a real estate with somebody else money. Yes, with somebody else money. Here is the story I got from a janitor in San Francisco. He works as a janitor but he owns 2 houses in San Francisco. You might ask how he can do that. The answer is he bought his house on a mortgage with a very low interest income. He splits the house into two rooms that he rented out for two families that has to pay him rental fee each month. With that money he can finance his mortgage with somebody else?s money. Smart, isn?t he?
Ok, the third one is through investment. A lot of American lost his money in stock investment in 2000. When all those dotcoms companies felt down, so did American. So, the question is whether it?s save to put your money to investment. The answer is yes. We all have to learn from mistake, not running from the mistake. We all know that a lot of people are blindly put their money in those dotcoms companies. So, next time you need to invest you better learn the company first.
There are a lot of tips that are available from the experts about how to choose the right investment. They all offer you with different solutions, so it?s depend on our judgments which one you think is the most trustworthy.
Ok, you might want to scream by now, all of those above investment need a lot of money to invest in. You will start to tell me that your saving is very low; you have debts to pay, etc. I know that most of us don?t have that kind of money in our saving. So, is it impossible for us to create our wealth? The answer again is No.
Here comes the fourth pillar. Thanks to technology that now we have the internet. With the internet we can create a low cost business with unlimited income. Yes, you have heard about it, but have you start to do that? With internet business, a lot of people have earned tons of money from it with very small cost. Comparing to those three pillars I mentioned above, this pillar is definitely has the highest return.
You have to try to find a perfect internet home business for you. You should do the researches before you decide to join and work for the company. You can find literally thousands of company that offer you with this kind of opportunities.
Now, I have mentioned all four pillars to create wealth. I have left you with no excuse from creating your own wealth, unless you don?t want to achieve your own financial freedom. So, I?ll leave all the options to you. You are the decision maker, and you are the only one can decide your future from today.