Category Archives: concepts

It is the cashflow stupid.

Business, concepts, Entrepreneurship, Investment, Money, real estate,

My friend Adrian posted a very good blog entry about cash flow.  His blog is one that everyone who is serious about being wealthy should subscribe to.  I made and answer to him that point out how stupid so many investors are.  I wanted to share it with all of my readers also so here it is.

Read his entry HERE.

Here is what I replied with….

I have seem this time and again in commercial real estate.  People are willing to leave a strip mall mostly empty, they are unwilling to do short term leases, or even to discount the leases.  So what happens, there are tons of strip malls, and office buildings here in Arizona that are empty.  They have this mindset that if they get a nice long lease that it will be better than the money now.  This may have been the case in the past but to me it just seems so stupid.

An example is a building I was thinking of renting back in 2002.  It was perfect for a business idea I had, I had the backers and was ready to go, I just wanted 6 months rent free and then to rent it for $12k per month, going up 5% per year.  They would not budge on their price of $18k.  It was too much so I passed.  Well now it is 2009 and it is STILL empty, no one has EVER rented it.

Another example is a strip mall that I know of.  It is very poorly designed but has over 400k square foot in total.  Less than 50k square foot is rented out.  A guy I know rented a 8k square foot space, and put a Filipino restaurant and grocery there.  Soon the space next door was rented by another Filipino to build a karaoke club for Filipinos.  It was all located in a part of the strip mall that was totally empty.  The grocery store invested everything they had, over 300k into building out their store and stocking it.  Then the economy hit them, and they could not pay the rent.  On the 15th day of the month the landlord locked them out, charged a penalty and the guy could not come up with the 20k needed, over 50k in food spoiled and they guy was promptly out of business, and the guy next door also moved out  The place is now empty.  So what did the owner of the property have to loose to give the guy some time to catch up, maybe some discounted rent.  He would surely not be making less than he is making right now, he has over 300,000 sq foot of other places to rent out, most of which are better.  It was dumb and short sighted, but that seems to be the majority of commercial landlords, especially the distant ones who never even see the property.

I think of tenants as clients.  They pay you and you should keep them happy.  You have only limited supply so when you are full you can be more selective and follow the rules to the letter, but when no one is buying your product you need to sell at any price to make money, they still like to keep rent high, and if it not rented then they take the tax break at the higher level.  That is illogical to me, but maybe that is why I am not as wealthy as they are.  Or maybe they are just huge REITs playing the game with other peoples money and they don’t really care that much.

Recession is a good thing if you have knowledge.

Bootstrap, Business, concepts, Entrepreneurship, Inspiration, Investment, Money, real estate, , ,

Ok, maybe this title is a bit shocking.  In easy time it only really takes money to make money.  In good times you can use a dart board at a page of stock symbols and make a decent return.  But when times get bad, like they are for many right now, most of the money gets really scared.  They don’t invest in the great companies that still exist, they don’t short the walking dead, they don’t buy the houses that are dramatically reduced.  They simply sit there and they buy bonds and Gold or just keep the money in CD’s if they can find a bank they trust.  Bike Race up Cat's Hill

It is said that on a long marathon, or in a long bike race that the best racers are hopeing for the hills to come, because it is the hills that lets them show their mastery and where they can gain ground on the competition.  When it course is flat and easy it is much harder to get ahead.  In the same way a recession is a great time for the smart and knowledgle person to get ahead. I am confident that if I was given $1 million dollars to invest as I see fit I could turn it into $3 million or more before this recession is over.  More self made millionares are made during a recession than during any other time.

During any time of significant change those that figure out the new way things will work and form a profitable business plan around it first are very likely to succed.  The people who are failing the most now are all the people who still have not found themself in the information age, the ones who still think that we live in the industrial age, you know the people who like to work for a factory, get a pension and live forever.  That age has been gone for 15 years or more, but most americans still live in it.  During this time there will be many people entering the information age, maybe for the first time.  People who will make a living online.  And there will be people like me there to help them, there to show them the way, and of course I will make a small profit on the activity.  This actually has been my main source of income for some time now.

So what would I do if I had a million dollars right now.  Well first I would build some online businesses, and make oppertunities for those who want to join the information age to do so with me.  But most of my readers can not do that I would guess.  So what would I do if I was them, and I just wanted to invest.  Well first I would take most of that money and start looking for good real estate.  There is plenty of it around, and there is plenty of it at prices that are lower right now than where the bottom will settle.

Just last week I was presented with a deal on a rental house, it sold for $180k only 3 years ago.  It now sat ready to buy for only $37k, and it could be rented for over $800 per month.  Using simple math that means that in less than 4 years your rental income should pay for the entire house.  That is like getting a stock with a P/E ratio of 3.8.  Sit on this one for 4 years and you get all of your money back, and by then housing prices will be out of the whole and you could sell this house for $120k or so, pure profit.  Do that over and over with half of the money and you could buy over a dozen houses, worth at least 1.5 million total 5 years from now.  Now that you know how to buy them cheap maybe other investors would like in on the deal, and you can let them buy some of the houses from you.  So lets say you buy 10 houses at an average of $40k each (Something that is easy in the phoenix market if you know where to look.) You invest another 5k in to making them nicer, and in getting them rented out to nice tenants.  Then you sell the house, and the future cash flows, you can do this at a rate of 10 times the projected yearly earnings, this is what investors look for.  That would be near $90k or so per house.  Now do this as fast as you can.  Lets say you buy 5 each month and sell 5 of the other houses each month, that would be an income of over $200,000 per month.

I am confident that I could do this already, I have the connections, I have the renters, I have the knowledge, my only problem is that I don’t have the money, because I was distraced with my other businesses, and my investment in them does not let me walk away.    My plan is to work hard in my current business, make $100k or so and then get started buying, filling and then flipping houses to other investors who don’t want all the trouble.  Take all procedes from each sale and buy more houses with it, do this until I am so busy that I can’t sell all the houses, so then start to keep some of them.  Do this until the recession is over then ride the wave of the readjustment back up, it will not be as large but should be good.  Now these rentals are my retirement fund.  Sell one when I need money.

This is a lot of work, and the key to success is partnerships.  This was my plan back a few years ago but things happened that distraced me, a wife and two kids later I was ready to go, but I got stunned by the economy a bit, but now I am over it and ready to go.  Anyone want to join my team and work with me.  Send me an email.

Some prespective for your life…

Business, concepts, Inspiration, Money, The World

One of my friends posted a blog the other day.  Here is his blog entry.

Please read that before you move on…..

After reading that I had to make a reply, and I thought that it was important for everyone to read it so I posted it here also.

Anyway it is so true.    I lived in the Philippines for a year and a half and I was very much in the elite, I was able to get the best service and best of everything when I was there and I lived on less than $2000 a month.

Most of the people we know there made less than $100 per month for their entire family.   We have chosen to give to pay for 4 kids to have a full ride at one of the nicest private high schools, with tuition, transportation, food and extras we send them a total of $150 a month, and that covers all of it with some left over.

If I was a millionaire I would have a very hard time buying this really expensive things, knowing that for the price of this Rolex I could send 10 kids to school for a full 12 years and dramatically change their life, after thinking about that there is no way I could buy the watch, the $80 watch I have now works great, looks great and is enough for me.

While I was there I was at a church and they had a video, it basically showed some stats, that if you slept in a bed, had a shower in your house and kept your food in a refrigerator you were better off than 85% of the world population.  If you had a computer in your house, now you were in the top 9% and if you had a car that put you in the top 5%.   I am sure that almost everyone that reads this falls in that top 5% and most of you also feel poor, and depressed about it, so feel blessed for what you have and move forward in life.

My Rapid Development Test

Bootstrap, Business, concepts, Entrepreneurship, Inspiration, Marketing, MLM, Money,

Let me tell you a quick story about part of my week.  I think this is how true Entrepreneurs operate.

On sunday I was sent a spam email for a service that looked fairly interesting.  For $39.95 per month it was interesting but I am cheap so I did not buy.  I forwarded the link to my business partner, mostly as a joke, saying “Look how easy it is to make money online.”  When he saw the page he thought I was right, and he asked me if we could do the same thing.  I thought about it for a few seconds and figured “Why Not”   So on monday afternoon we told a few others about our idea.  They really liked it.

I then wrote a plan of how to program it, it used some PHP and some other things that were above what I could do, so I wrote a project for it and tried to get a free lancer from Asia to it.  I had many freelancers talk to me about it but it seems that none of them got it, so I started thinking about how I could do it myself.  So all tuesday morning I worked on coding, and by tuedsay afternoon it was done.  I still had a few glitches and by wednesday morning it was totally complete.   We emailed it to a few people and they were loving it.  On wednesday we had our first customer at $20 per month.  Thurday we added a second.  On friday we talked with a guy who is confident that he will help us sell 50 sites.  We gave him a free account.  Now it is friday night, one more person just signed up for $20 a month.   I figure at this rate we should have 50 new people a month or MORE.

So lets recap.   We went from idea to profits in under 72 hours.  We have zero cost other than our time, and have $60 per month coming in already with much more to come.  I will keep you updated and in a few weeks give a total of how many people we have.

Rapid Development is the key to all of this, most people I know would not just jump in, they would hesitate, and then never do the idea at all.  That is what I would normally do, but that is why I have a business partner that likes to get thigs done.

The best way to have a good idea is to have many ideas.

Business, Computers, concepts, Entrepreneurship, Inspiration, Investment, Marketing, MLM, Money

idea_bulbI saw this topic on a TV today, was the quote of the day.  I was thinking about it for a while and it is so true.  So many people come up with one idea and they focus on that way too long.  And for most people that idea is to work for some big company.  Once in they are in that job the company gives them a ladder that they start to climb…. work two years then get a bit more power and a bit more money, then do it all over again.  It is just enough to keep people doing it yet never enough to let them do anything else.  This works great for the people who own the company.

See I have never had a day job, I have only had businesses.  I also have make it clear to many people that I am an entrepreneur and I have surrounded myself with people that are also the same way.  This lets me get on the ground floor with some great ideas, it also give me access to many great ideas and from that I can select the best ones and work on them to make them even better.

In the last three months, I have joined an MLM company that helps people do loan modifications, I have started a new company that sells online marketing, I have been developing a concept that lets us help people create instant online stores that sell my products.  And just this week I joined another MLM that has a great marketing idea to get people more web traffic.  I also made adjustments to my main company, Emerald Computers, I have lowered prices and automated things much more. On top of this I have discovered some tools that make my life much better and more profitable, and I have connected with some people who also do the same thing for me.

So all of this means that I am much better positioned to have wealth flow towards me.  With all of these ideas at least one of them should be a home run and make my fortune this year.

The best way to have a good idea is to have many ideas.

Computers, concepts, Entrepreneurship, Inspiration, Investment

I saw this topic on a TV today, was the quote of the day.  I was thinking about it for a while and it is so true.  So many people come up with one idea and they focus on that way too long.  And for most people that idea is to work for some big company.  Once in they are in that job the company gives them a ladder that they start to climb…. work two years then get a bit more power and a bit more money, then do it all over again.  It is just enough to keep people doing it yet never enough to let them do anything else.  This works great for the people who own the company.

See I have never had a day job, I have only had businesses.  I also have make it clear to many people that I am an entrepreneur and I have surrounded myself with people that are also the same way.  This lets me get on the ground floor with some great ideas, it also give me access to many great ideas and from that I can select the best ones and work on them to make them even better.

In the last three months, I have joined an MLM company that helps people do loan modifications, I have started a new company that sells online marketing, I have been developing a concept that lets us help people create instant online stores that sell my products.  And just this week I joined another MLM that has a great marketing idea to get people more web traffic.  I also made adjustments to my main company, Emerald Computers, I have lowered prices and automated things much more. On top of this I have discovered some tools that make my life much better and more profitable, and I have connected with some people who also do the same thing for me.

So all of this means that I am much better positioned to have wealth flow towards me.  With all of these ideas at least one of them should be a home run and make my fortune this year.

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Last Day of the Year Discounts

Business, concepts, Money

Today is the last day of the year. Of course there are the parties and such. To me it is much more, it is a time to look back and look forward. But for many people it is just another tick of the clock.

One interesting part about this tick is the way that accounting works, you see by this time in the year all of the spending is done in most companies. But they want to lock in better earnings, so they have every reason to push really hard to get in some last minute sales, even if they sell at or near cost. This happens to a lesser extent on the last day of each quarter and a bit on the last day of each month. Sales people need to reach quotas, managers need to reach their numbers also. Because of all of this it makes this one of the best days to buy something. This works better at places where you negotiate for something. On the last day of the month you can usually get a new or even used car for far below what you can get it for on any other day, and the end of the year is even bigger. It works well for real estate companies; if you need to sign that new lease they are eager to get it in the book for this year. One place I have tried it with great success is with a T1 vendor, for internet access, I called them on the last day of march, and the sales guy was so desperate that he gave me a price only 30% of what I got the week before, and wanted to lock it in for three years, that alone save my client thousands over that time period.

So if you are thinking about buying something, especially a vehicle, then go shopping today, you will save thousands, and maybe even lock in that tax deduction this year.  If you get a Ford or GM they have huge discounts that also expire today.

The tale of the McDouble, and lessons from it.

Business, concepts, Entrepreneurship, Investment, Marketing, Money, , , , , ,

In this age of all the hype about a down economy many people are looking to save money.  One thing that millions have done is turn to dollar menus at fast food restaurants.  I have noticed that chains with good menus are busy and still quite popular, and presumably profitable.  I have also noticed that some chains just don’t seem to be catching up, such as Arby’s, A&W and Long John Silvers.  I often drive by many of these and the parking lot is usually empty, and when I go inside the whole place is empty.  It seems that some companies are watching the trends, they share this data with all the franchise owners and make changes to their system to make it more profitable, others simply sit there and do nothing, watching their empty store.

McDonalds has always provided good value, they are good at making customers think they are getting a great deal and that is because they usually are, as long as you stick to the value menu.  The only burger left on the value menu was the Double Cheeseburger, a fairly good burger and a great value.  In December of 2008 they replaced it with the McDouble.  It is the exact same thing but with one less piece of cheese.  They say it will save them 6 cents each, and I have eaten a few of these already, they still taste just as good and now have less fat.  Of course this was done mostly to save McDonalds money, but the lesson that should be learned is that businesses have pressures that make it hard to stay profitable in this economy, while at the same time they need to offer better deals to keep the customers coming.  Some get it, and have started to change, and others are simply empty and on the road to failure.

It is hard for most small business owners to understand that by charging lower prices they can make more money per day, simply by doing more transactions.  I went to the mall this weekend and there were a few stores going out of business, they even had 50% off sales on most everything.  But even at this price they were STILL more expensive than the local Walmart, it is obvious why they went out of business.  Too many store owners in the US have really gotten away from providing value for their customers.  During my travels in Asia I have noticed that most companies have a very small markup.  I even have talked to many owners that felt that a 10-20% is fair and ethical, and more is not.

In the US for the last few decades it has been all about getting as much as you can, charging all that the market will bear.  But this mentality is not going to work any longer, too many people now are suddenly taking the time to watch their dollars.  The companies that have ran their business on this model and have grown with borrowed money to take all they can have seen their sales dry up, and their bills come due, with out being able to borrow they are going out of business.  Yesterday during my trip to the mall I visited Dillards.  Dillards had a huge sale, all watches were 50% off, Jewelry was the same, and most every section of the store was the same.  The store was packed, it took 15 minutes just to talk to someone to look at a watch, and people were buying all over the store.  Some of the employees were worried because it felt like the store was going out of business, the check out lady said she was there for many years and has never seen this before.  But for me I know that stores like this are still making money at these prices, and it is much better to sell the stuff and make something than to keep it in inventory.  An hour later I walked into Macy’s.  They have a larger store, and almost nothing was on sale, and because of that there were almost no customers in the entire store.  The employees were just sitting there.  Macy’s is a big and old company, maybe they just have deeper pockets, but more likely they just don’t get it yet.  They both are public companies and both are down over 60% in the last year, lets look a year from now to see who does better.  Dillards will be able to report higher sales.  They took a large hit in their stock price with they announced their October and November sales numbers going down 10% from 2007.

On a side note the company report from dillards says this…

During the four weeks ended November 29, 2008, sales were significantly above the average company trend in the men’s apparel and accessories and shoe categories and significantly below trend in the juniors’ and children’s apparel and home and furniture categories.

I have been told before that when the job market gets tough people tend to dress much nicer, they need nicer clothes to go to that interview or to simply look better on their current job so that they won’t be fired.  People are willing to skimp in other areas.  I just find it great when you find hard data like this to confirm everything you have been taught.

Thanks for reading, I would really like to hear from you about what you think, please leave a comment.

One Simple Change that will rock your world.

Bootstrap, Business, concepts, Entrepreneurship, Inspiration, Investment, MLM, Money, real estate, The World, , , , , ,

I am sure that you have noticed that the media, and what people talk about has really become a bummer recently.  I mean all that I hear is doom and gloom.  It is a fact that the economy is slowing down and things ARE going to be much different in many different areas in the future.  Two main areas will be the availability of credit and the profit margins that companies have.   Many companies simply are too inefficient to stay afloat in this time.  Many companies will close and make all their employees go home, others will cut costs by eliminating employees, both of these factors will result in much higher unemployment.    Bills will go unpaid, people will be evicted, and the masses will feel generally negative.

So what can you do about all of this, for yourself and for your business?  Well the truth is that you must change the way you think about all of this.  Here is the real situation, there has been a shift happening for a while in the way business is done, the way money is made.  Knowledge is the key, creating a better system to do something and then implementing that system is the road to wealth in America now.  It has been so for a long time but the majority still can not see it.  In a time of change, like the one we are going through, there is unprecedented opportunity everywhere.  The larger the crisis the larger the opportunity.  And we are in a huge crisis, it is most likely that the opportunity will never be larger in your lifetime to make serious money, have serious success or to change the world.

So here is the basic change that you need to make.  Every time you hear someone say “Challenge” or “Crisis” or “Recession” or any of the other negative things you hear every day, constantly think “OPPORTUNITY”. Think about how the change has displaced old players and has make openings for you and your business to move forward.  When you hear about how someone can’t get a new car because of the credit mess, think about how money can be made keeping their old car looking like new.  When people talk about going out of business or they are clearing out their inventory to make payroll think about what a good deal you can get, and how you can buy more than you need and then mark it up to others once the sale is over.  (I do this on Laptops, buy at the clearance sales, and sell after the sale is over, or online to those that don’t know about it.)  When a company goes out of business you can look at the strong companies in the same industry and you have just found a good investment.  Best Buy is going to do great in 2009 when Circuit City is gone, that was the thorn in their side and it is gone.  And what about all those people who are out of work?  Well MLM sign-ups are at record levels, everyone is looking for an opportunity to own their own business, and people are putting much more effort into building those business.  Because of this so many new MLM companies have popped up, but many of them are not very good, please read about what makes a good MLM here.  When you see the real estate market just think about the fact that in the long run housing always goes up, and many cities have already started to show signs of recovery.  You can easily find houses that are great deals, get a tenant in there, and have much larger positive cash flow than has been possible for over two decades.  I know people buying houses with 20% down for under $120k and having payments less than $600 a month, then they rent it out for $1,200 a month.  Rental prices have not seen the drop that ownership has had.

So in every area that I can think of there is huge opportunity for the person and company that can see what if going to happen, figure out the correct change to make and implement that change quickly.  During this time you will need to break some ties with your old cash cow that has been paying your bills for the last few years, and focus on what is going to make you money in the future.  Many people will never be able to do this.  I know a very rich and successful guy who has not changed the way he has done business in years, his company has recently had to move out of two of their buildings, fire half the people and make some other huge changes, but they did not change the core of their business, and their business focuses on Luxury Construction supplies in Arizona, and I fear that this is not a market that will come back before this company is out of business.

So look for the opportunity in every crisis, embrace change and reap the rewards.

A change is coming.

blogs, Business, concepts, Entrepreneurship, how to, Inspiration, Money

For a while now I have not been blogging very, much.  The main reason for this was my leg injury which really limited the amount of time that I could sit at my computer.  I used the laptop but the letter O was missing until I just got a new keyboard for it.  This made my time on the computer much more limited and work took the highest priority.

I now know that another main reason for that was because of the feeling I had that my blog was restricting me.  Basically i started this as a business blog, but recently my thoughts have not been too much about business, it still all comes from a business perspective.  I feel that I have a lot of good things to say that people are interested in.  I am often wrong, and I also often come up with new ideas, and follow them to see where they go. I also felt that often other people did a much better job than I ever could do and they covered the topic I want to talk about better than I ever would so I then decide not to post on that topic, I will change that and just point out their brilliance, and tell my readers to read their articles.

I have noticed that the blogs entries that I liked they most, and the ones that were the most popular are the ones where I tried to explain or simplify a complex topic.  By far my blog entry on “How to buy a laptop” is the number one entry, followed by “How to Buy a Computer Monitor” and “The Mortgage Crisis in Plain English“.   So I have decided that I will post many more entries where I simply take a complex subject, analyze it, and put my opinion.  In some areas I am an expert but in most I am not, but one thing will stay true, I will try to focus on every topic from the perspective of an Entrepreneur.

So from this day forward I will strive to post on this blog much more often.  My leg is feeling better now, and I also now have the keyboard so I can post from the laptop also.  This will make it much easier.  With the new topic I feel that I will have much more to say, in fact I have a huge backlog of topics I want to write about.