Saturday, August 30, 2014

Catch up on my video content this long weekend

I'm still away on vacation in the states.  The easiest way to catch up on my video content this long weekend is to watch my YouTube playlists.  Depending on your platform, you could literally just sit there and probably watch me for hours.
Enjoy the long weekend.

Education videos can be seen here: 
http://www.youtube.com/playlist?list=PLqomziNDpylURi3EScUm94fwDe4a3oSD6

Stories can be seen here:
http://www.youtube.com/playlist?list=PLqomziNDpylU3cT21lgRghzAG67kmjO4z

Thursday, August 28, 2014

I'm away on vacation, now is the time to catch up on my top 5 blog posts...

Hi,

I've taken the kids away on a trip to Maine and New Hampshire.  Maybe I'll post some pics of us at the top of Mt. Washington when I get back.

In the mean time, why not take the time to read up or watch my most popular blog posts.  This blog is only about 4 months old and I'm proud that some of these have had over a hundred readers.

Thanks to all of you who take the time to stop by.

Top 5 Blog Posts from www.InvestLocalBook.com


  1. SPENT-- Fantastic Documentary about the 'unbanked'
  2. Ice Cream Investing- Step-by-Step
  3. Growing a business to DEATH!
  4. The truth about eating out. You'll never accumulate wealth if you spend all your money... and erode your health.
  5. Small businesses need investment and will pay big %%%

Friday, August 22, 2014

[VIDEO] Using free tools like Google Docs to track local investments

This is a follow up to the story about the young couple who I made a loan to for a medical device and debt consolidation.

I show how I use free tools like Google Docs to keep track of the investment and why it works so well for the borrower as well.

Enjoy



The original loan background story can be viewed here:

[VIDEO STORY] A recent personal loan deal

Thursday, August 21, 2014

[VIDEO] Blog hits 5000 views! I'm having a sale..

I'm so happy that my blog www.investlocalbook.com has reached 5000 views that I'm having a sale.  These links will work until Labour Day 2014.


Get a copy of Invest Local for 30% off:
https://gum.co/quoB/5000 views

Get a copy of Credit Card Advantage for only a buck!
https://gum.co/jgfa/5000 blog views

Wednesday, August 20, 2014

Big Money is going after small business deals, maybe you should too...

I subscribe to many newsletters that fill my inbox daily.

Today I was interested to read this announcement that Square, operator of the tiny credit card terminals that plug into smartphones, has entered the merchant cash advance business.  

This is another example of the 'smart money' chasing after the opportunity in small business lending.  

I detail several deals that you can do yourself to get big returns in my book, Invest Local.

Learn exactly what a Merchant Cash Advance is by viewing my video below...

SQUARE BEEFS UP MERCHANT CASH ADVANCE BANK ACCOUNT

By  What's Next In Payments®
7:30 AM EDT August 20th, 2014
Square Inc. said Tuesday (Aug. 19) that it has secured an unspecified investment from Victory Park Capital and that it plans to use the money to expand its Square Capital small-business financing program.
Through the initiative, Square helps businesses grow by giving them access to funds quickly and simply. The investment will enable Square to extend hundreds of millions of dollars to tens of thousands of additional sellers who need capital to grow, the company said in the funding announcement.
“We are pleased to be partnering with Square and believe they are uniquely positioned to serve their merchant base with another best in class product,” Brendan Carroll, Victory Park Capital partner and co-founder, said in a statement. “We’ve been tremendously impressed with Square Capital’s data-driven approach to merchant finance, and we are confident they will achieve substantial growth in a dramatically underserved market.”
Square said it has extended nearly $50 million in Square Capital to more than 10,000 independent businesses and it said the opportunity for continued growth within the small-business financing space is significant. More than a third of merchants who have completed their first Square Capital advance have renewed for a second round of capital to make additional investments in their business, the statement said.
Square Capital merchants thus far have processed more than $1 billion with Square and have used funds from the program to buy equipment and inventory, hire more employees, and to add new stores, Square said. Follicle Hair Salon, for example, used Square Capital to move into a larger space and add 12 new salon chairs, with each chair bringing in between $5,000 to $8,000 a month.
Last week week, Square published a blog post noting the top 10 myths about the company. go to full article

One of my videos where I explain how merchant cash advance works.

Tuesday, August 19, 2014

[VIDEO] How and Why to put systems into your small business

I discuss a call with a businessman who was wasting time 'putting out fires' all the time because he hadn't taken the time to implement proper business systems.

I discuss the 'how' of the 'e-myth' process.

Enjoy


Friday, August 15, 2014

Small Business Lender Reveals biggest reasons why small business loan applications are declined.

I asked my friend Florence Rose to write a short guest piece on why she declines some of the applications she receives.  This brief glimpse of what goes on in the underwriting process of an institutional lender can give us all great ideas if we ever consider making our own investment into a small business.

Why decline a loan application?  
I grew up in a world of Entrepreneurs. It is what I know.  I breathe, eat, sleep and drink entrepreneurship.  All of my post-secondary education is focussed on every element of Small Business Entrepreneurship and Entrepreneurial Finance.  

 Why do I turn down loans?
 My compensations are partly driven by financing successful businesses and contributing to a strong economy.  Throwing money at businesses, that in my experience will fail, does no good for anyone.  No good for the entrepreneur, the financier, or the economy.  I want to contribute to a healthy economy.  I want to finance Entrepreneurs who will be successful.  My instinct is dead on, as is my education which contributes to good decision making.

 Why do I decline loans?
 1.       Poor credit and lack of investment – All research about loans of $250K and under are conclusive; if you don’t manage your personal credit well, you won’t manage your business credit well.  If you don’t pay small bills on time, you won’t pay me on time.  If you haven’t managed your personal wherewithal you will not apply sound judgement to your business.  It is one in the same.  

2.       Managerial Incompetence or Lack of Cross Functional Management Team – Just having functional expertise is NOT enough.  I can be a great plumber but if I don’t have small business management skills, I won’t make it.   Being a functional expert is NOT enough.  Either you are great at administration (the other half of business) or not.  If you are not, you have some options.  First, partner with someone who has the ‘other’ functional expertise in business.  Second, hire a great consultant to address your education gaps.   Third, stay employed at your current job.  Sometimes a great plumber is just a great plumber.  Not always are they great Entrepreneurs.  Be smart enough your strengths and weaknesses.

3.       You run out of cash – Cash is King.  If you don’t have #1 or #2 under your belt, then you will have challenges with your billing, collection, and payment of cash.  Again, don’t drive the Porsche if you don’t plan to fill it with high octane gas. 

4.       No market – You might have a great idea in business, but if there is no-one to sell your product/service to, you can’t generate cash.  Don’t over estimate your market if you are starting a business.  If you are sure you have clients to purchase your product/service too, get them to put it in writing.  These sales can be used as the basis for your cash flow forecast.

5.       Make a solid business plan with SMART objectives – Specific, Measurable, Achievable, Realistic, and Timely.  Know who you are, what you do, how you will do it, and make sure your operating plan is congruent with your strategic plan. 

Florence Rose is a small business credit specialist and can be reached at florence.rose@bdc.ca  Florence helps entrepreneurs in Southeastern New Brunswick, Canada.







Wednesday, August 13, 2014

Private lenders step into mortgage void left by banks

I was doing some reading online when I came across this article published in the Toronto Star about private lending in the GTA real estate market.  

What I find noteworthy in the article is that many of the borrowers are now in dire straits and in risk of losing their homes to the lenders.

As a private lender/dealmaker, this is not the place you want to be.  (it's far better to get paid than to end up owning collateral.)

That's why in my book, Invest Local, I outline why real estate deals are dangerous because the lender is relying on the borrower to qualify for new credit in order to get out of the loan.

I find that fully-amortizing loans to be a much better risk for my money since I can control the back end.

 Full article link below:

By:  Business Reporter, Published on Thu Jun 19 2014Private lenders have been moving aggressively to fill a growing void in the wake of Canada’s tighter mortgage lending rules, offering loans to desperate homeowners that, with fees, can range from 12 to more than 30 per cent interest rates, leaving some people at risk of losing their properties.
Mortgage brokers say they are seeing more people — especially self employed or those who bought preconstruction condos or houses before Ottawa further tightened lending guidelines — now scrambling to get mortgages or approvals to refinance their properties.
So many are now being turned down by the A lenders — banks offering 2.99 per cent mortgages — that B lenders such as trust companies, with rates of 4 to 5.5 per cent, have seen a significant spike in business.
So have private lenders — a largely unregulated sector of the mortgage market where money pooled from investors is used to offer one-year, interest-only loans to desperate borrowers traditionally considered high risk.
Veteran mortgage broker Jason Friesen calls the growth of such alternative lenders “a sign of the times.”
“We’re going to see more and more of this. It’s very much a byproduct of people who, for so long, used their houses as a bank machine and now it’s catching up to them. You’re finding a lot of desperate people doing desperate things.”
Friesen has seen a virtual doubling of people who no longer qualify for mortgages from banks.
“Where it used to be one out of ten, it’s now two in ten, and substantially higher for self-employed. They are being hugely impacted by this.”
The costs of having to turn to alternative lenders can be staggering.
A $500,000 mortgage at 2.99 per cent over 25 years costs about $2,360 a month. At the 5.5 per cent charged by B lenders, that rises to $3,000 per month.
But that mortgage payment skyrockets to $6,200 per month — and that’s interest only — from private lenders charging, say, 15 per cent. On top of that is frightening fine print and fees, often overlooked by desperate borrowers, from lawyer to lending and late payment charges that can add tens of thousands in costs.
The pool of borrowers with no choice but to take the private route appears to be growing, as are the email marketing campaigns by private lenders offering to do “difficult deals” or “what the bank does not.”
Brokers can get hefty fees for connecting private lenders with borrowers needing 85 or 90 per cent financing, in excess of the 80 per cent loan to value of the home limits that Ottawa has now imposed on the big banks.
Broker Steve Garaganis calls private lending “a minuscule” segment of the mortgage market. He urges clients to rent, rather than further burden themselves with high-interest loans in what can end up being a futile effort to hang onto their homes.
But he sees more self employed, who used to qualify with the banks, now forced to alternative lenders because “Ottawa has gone way overboard” in tightening the lending rules.
Broker Rod Smith specializes in arranging private mortgages, but only with money from wealthy, savvy investors who are vetted to make sure they can afford the risks. Most are looking for alternatives to the stock market and like the fact the loan is backed by a hard asset, real estate.
Private lending “is a growth sector right now, but that’s because of the contraction of the institutional (bank) sector,” says Smith.
In fact, it’s resulted in a “higher grade of borrower” turning to private lending, especially self employed, he says.
Brokers believe the worse may be yet to come as highly-leveraged homeowners, or self-employed persons lacking adequate proof of income, try to renew mortgages in the next couple of year and find themselves turned away by the banks for the first time.
One Mississauga woman discovered the hard way the high costs of private mortgages after being turned down by both A and B lenders for a second mortgage on her $325,000 townhome. She was looking to consolidate debt after a bout of joblessness.
She was eventually able to borrow $20,000 at 16 per cent. But the woman says fees, for everything from documents to late payments, have been crippling and she’s at risk of losing her home.
“Their fees were so disgusting that I just couldn’t get ahead. I’ve just not been able to re-establish my credit (rating),” said the woman, who spoke on condition her name not be used.
It’s not only desperate borrowers who are at risk.
Toronto realtor Brian Persaud has been trying to sell a condo for a woman who is now $77,000 in debt after she says a broker convinced her there was big money to be made if she used her Home Equity Line of Credit to help needy borrowers.
Her first $35,000 loan went well. The one-year, interest-only loan was repaid on time and the broker paid her a hefty return on her investment, including $1,700 in fees.
Today, however, she’s out $77,000 after a second loan of $50,000, also against her HELOC. Only later, she says, did she discover the money was being used as a second mortgage on a condo.
The owners defaulted and she was left on the hook for the mortgage, as well as mounting maintenance and other fees.
The single mother acknowledges now that she should have hired a lawyer to look at the deal first. She’s fearful of having her name used, in case her bank discovers how she’s been using her HELOC.
“I thought, ‘This is going to make me some extra money. But the broker didn’t do his math. Right now there is nothing (no value in the highly leveraged) condo to cover my money.
“I would never go into this kind of situation again. It’s killing me.”  original article here...

Tuesday, August 12, 2014

[VIDEO STORY] A recent personal loan deal

I tell the story in this video of a young couple who needed to borrow for debt consolidation and to buy a medical device.  I outline my criteria for doing personal loans and how I set it up as a 'minimum payment' deal.

Enjoy.


Friday, August 8, 2014

[VIDEO STORY] I met a guy in the lease-to-own furniture business at a BBQ

I tell the story of a guy who works in the lease-to-own furniture business and get an understanding of their business model with a few well-crafted questions.

I'll be doing an ROI calculation when I get my hands on one of their advertisements.


Thursday, August 7, 2014

[VIDEO STORY] Retiring Entrepreneur turns his business into an Annuity.

I tell the story of a shrewd negotiator who got both a higher price and a retirement income by understanding how to structure a win-win deal with a buyer.

Learn more about notes and local private business deals by reading Invest Local.


Tuesday, August 5, 2014

When care and devotion are absent in a business

We just finished a wonderful holiday long weekend here in New Brunswick.

The weather was perfect and I had my kids for the weekend.  My ex-wife's parents have just bought an RV and had taken it to a beach-front campground.  We were invited for a day of beach fun!

Because I'm so totally wrapped up in business, I couldn't help but notice the signs of an owner who has just stopped caring about his business.

When a business owner is tired, the first things that start to decline are what I call 'customer experience items.'  These are easy to overlook, but combined together they start to put a damper on the fun your customers may come to expect.  Here's what I noticed about the campground:

  1. There were no garbage cans on the beach.  This encouraged some beach-goers to litter.  I didn't like it.
  2. The beach had beautiful sand but there were many pieces of sharp sandstone mixed in.  Two guys working a full day could probably remove 90% of them.
  3. The playground equipment was old, needed paint and hadn't been maintained in years.  I forbade my daughter from using the swings because I feared tetanus if she touched the rusty metal pipes.
  4. There was no food service at all.  No hot dogs, cans of pop or anything.
  5. The WiFi was poor.  This didn't affect me but it was funny to see many of the campers out waving iPad's in the air, obviously trying to catch a signal.
  6.  The whole business was cash-only.  I witnessed one customer who left because they wouldn't accept her debit card to pay for a campsite.
I just think its sad.  The right owner with enthusiasm could grow the number of repeat clients and increase revenues with add-ons like food sales or a bar.  

I guess if he doesn't do well this year, he'll just blame the economy or the tourists who don't like to visit him too long.

BTW.  I used my new Sport-Brella sun shade.  I highly recommend it.  Easy to set up and didn't move a bit in the wind.


Saturday, August 2, 2014

Properly Structured Business Purchase deals can close quickly, even with Bankers involved

I came across this story about a bar/restaurant deal in California.  What strikes me is that the price was right, the buyer had experience and an adequate down-payment.  The deal came together quickly because the banker also saw that the deal made sense.  
Unfortunately what I see so often here locally is that sellers want unrealistic prices and so the businesses stay on the market forever and scare off the serious and qualified buyers.

CEO & President , Paramount Restaurant Brokers, Inc. DBA SellingRestaurants

SBA Loan funded in 45 Days for a Restaurant seems impossible, particularly in California where the state is over regulated with delays in liquor license transfers, fictitious name filings, health inspections, fire inspections, entertainment licenses and the list goes on and on.
But there are rare instances as in the case of Pirates Grub N Grog in Channel Islands California, where there are motivated parties on all sides of the deal, buyer, seller, banker and broker.
I entered into contract with Pirates Grub N Grog representing the Buyer. I knew the business well and I knew the owner just as well. I had already prepared the valuation analysis using the tax returns. Sales price $525,000. Knowing I was getting into contract, I contacted my banker to have him review the restaurant's financials. I knew we had a strong business with an adjusted net in the $240,000 range. Bingo on the value.
Then I sized-up the buyer. Solid experience! About $110,000 cash. A FICO in the 750 range. Owned real estate without debt worth $350,000. We went for a loan of $400,000 including $40,000 of working capital. We had the seller carry $75,000. The buyer would be out of pocket when escrow closed about $69,000. I polished his resume.
We had loan approval in 8 business days. But before that I had gotten the lease negotiations and liquor, license transfer process underway only because I knew the deal was solid on all sides.
This started June 20th. We are funding the loan this week July 30.
The banker said he has never seen a deal fund so fast and particularly for a restaurant with all the regulations in California. But it is all in preparing the business and buyer as well as having motivated parties to the deal. read more


To learn more about how to properly find and buy a business with or without a broker, consider enrolling in my 16 week business buyer course which begins this fall  Click for more info