No Money Down Alchemy PRO1.0

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No Money Down Alchemy - PRO

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PLEASE NOTE This information does NOT construe financial advice. DO NOT make any investment decisions without taking advice from a certified professional.
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Introduction
The aim of No Money Down Alchemy Part One was to open your mind to possibilities and as a result change your mindset. Most people are unaware of the wealth of opportunity all around them. I suppose the style and tone of the writing in Part One reflects the way that I would have liked the information presented to me when I first came across it. I believe that I would have understood, digested and taken action quicker if it had. Anyways, I got there in the end! The information in Part Two could be heavy going at times so I edited it into short paragraphs and bullets points wherever possible. The information is based on an audio recording (by Denis McCoy a Business Acquisition Expert). LOOKING FOR JOINT VENTURES: If you would like a joint venture partner for any deals valued more than 2 million (UK Only), you can contact Denis and strike up a deal. PLEASE NOTE: Some fees are payable in advance.
Prospecting for no cash down deals

1. Look and you will find. Cold canvass for hot leads. 2. Advertise for results. 3. E.G: I want to buy any type of retail business in the London area. Immediate cash available. 4. Suppliers can supply leads. 5. Business brokers. 6000 of all business are sold through business brokers and are a valuable source not to be overlooked. Typical broker has ten buyers for every good listing. 6. Convince the broker you are a serious buyer. 7. Act like a successful business person. 8. Make an appointment. 9. Dont walk in cold. 10. Brokers are professionals and appreciate buyers who treat them as such. 11. Dress correctly. 12. Prepare a portfolio with your resume. 13. Never tell a broker that you have no cash. 14. Always let the broker think that you can raise the required funds for the deal. 15. Create the impression that you are relying on that particular broker, nevertheless you should check available opportunities with every broker. You cannot afford to rely on one broker. 16. Review your business criteria with the broker as he is best qualified to tell you if the business you are looking for is available. 17. Check out every listing conceivably of interest to you. 18. Dont ignore listing because sales appear too low, price is too high, or other terms seem out of line. 19. You have to inspect it to determine whether terms are acceptable. 20. Let the broker know why you decline a business. 21. Stay in constant communication with a broker at least every two or three weeks to remind him you are a buyer. 22. Dont forget new daily listings. 23. Always work through the broker on any new listing he presents to you. 24. A good broker can be a valuable intermediary between you and the seller. 25. Approach all brokers in your area. Dont limit yourself to the largest and most active. 26. Start with brokers who specialize with your type of business, such as restaurants, liquor stores, hotels, convenience stores, chemists, restaurants, etc.
Good opportunities are advertised.

There are plenty of winners advertised in your local press if you just know how to read between the lines. Try to obtain back issues of business papers, and observe over several weeks whether there is a decrease in price or other sign of desperation that can lead to a no cash down situation.

Look for words that provide clues - owner must sell or illness forces sale. Financing available, terms negotiable or low cash down are usually signs of a highly motivated seller. As with broker listings you should ignore quoted price and terms. Be analytical. Watch to see how the terms change as the business becomes stale. Prior ads tell you a story and allow you to track seller anxiety and can provide a valuable negotiating tool.
Who wants a troubled company?

Many no cash down buyers are interested in a company with problems that can be picked up at a bargain price, turned around and operated or sold at a profit.
If you want to try your hand at revitalizing a near bankrupt business:

1. Check the public records for companies with tax liens against them. Professionals dealing with insolvent firms consider this a sure sign of financial crisis. 2. Contact auctioneers. 3. Contact court appointed receivers. 4. Contact Dun and Bradstreet. 5. Dont overlook commercial banks and other lenders. They have many problem accounts that they will encourage a no cash down deal if they think you will solve their loan problems. 6. You will find plenty of distress situations in newspaper ads and broker files.
Five sure fire sources of leads.

Trade and professional associations Schools or colleges that train people in your target industry. Accountants and attorneys usually know when a client is planning to sell. Business opportunities journals. There are hundreds of businesses for sale nation-wide. Dont overlook your boss. Almost 20% of all buyers end up buying their bosses businesses.
Measure the earning power of a business

Reconstruct the sellers income statement to determine the accurate current pre-tax operating profit. Owners salary often inflated to minimize taxes Owner perks may be buried in other expense categories. Depreciation should be adjusted to reflect the actual depreciation in asset value each year. Review each line item until actual earnings have been accurately recast. Present earnings means current earnings not projected profits, because the seller cant sell potential that is the new owners affair. Be willing to pay the seller only for the profits he delivers.
Eight factors that influence business value.

1. Supply and demand. 2. Nature of the business. 3. Risk 4. Down-payments 5. Financing terms 6. Motivation (how anxious the seller is to sell) 7. Personal goals. 8. Cash flow
LESSON 1 : Price is only a number

An asking price can intimidate the untutored buyer who erroneously believes the business is beyond
his reach. Scan the Businesses for Sale ads and you will encounter numerous businesses sporting astronomical price tags. Whether 50,000, 100,000 or a million, you might as well proceed to the comics, because cannot scrape together 20 to take your family out to dinner. you
Dont be intimidated, price is only a symbolic figure, and does not mean the 100,000 will come out of your pocket. In reality the seller is saying I want to receive the equivalent off 100,000. My business can generate the cash, and your job as the new owner is to see that it does. Lets take a sample ad and test it in this light. Restaurant for sale. Sales over 500,000. Price 140,000. Lets see how many ways you can create a financial pyramid and gradually build the 140,000, while making use of somebody elses money. How many ways can you stack your financial blocks to persuade the seller to lend you the entire 140,000. On the other hand you could borrow 1 from 140,000 people to achieve the same goal. Five different buyers competing to buy this same restaurant on No Cash Down terms might construct five different financial pyramids to reach the 140,000. Lets see what the formulas look like.
Buyer # 1 75,000 bank loan secured by the business. 40,000 seller financing. 10,000 assumption of sellers liabilities. 15,000 loan from suppliers. 140,000 total.
Buyer # 2 Barrington Robinson All Reserved - offlinegenie+support@gmail.com 6

90,000 seller financing. 30,000 bank loan secured by the business. 20,000 investment by partners. 140,000 total
Buyer # 3 60,000 re-leasing of equipment and fixtures and fittings. 20,000 seller financing. 20,000 assumption of sellers liabilities. 3,000 from business broker. 7,000 personal loan 10,000 supplier financing. 20,000 borrowed from business cash flow. 140,000 total.
Buyer # 4 100,000 seller financing. 40,000 investment by partners. 140,000 total.
Buyer # 5 60,000 bank financing secured by the business. 30,000 seller financing. 3,000 loan from business broker. 2,000 loan from business partner 10,000 sale of certain business assets. 10,000 personal loan. 5,000 borrowed from business cash flow. 10,000 supplier financing 10,000 assumption of sellers liability. 140,000
LESSON 2 : Build from the ground up

Elderly gentleman John was a typical seller: reasonable, willing to listen, but also concerned about getting his money. We started by asking what financing was available if we agreed to pay the 140,000 for the restaurant. After some negotiation we agree on 5000 or 70,000. Next question. Ask about the outstanding debts. This usually gets a sharp rebuke. But reason along the following lines: Wouldnt you, John, wind up with the same amount of money if the buyer assumed your debts and deducted them from the down payment. John had to agree handing us another financing block of 30,000. We immediately locked the assumed into place. Now we had commitments for 100,000 minus 70,000 through the Seller, and 30,000 through assumption of liabilities. We still had 40,000 to get to the top of the pyramid. One of the ways we could do this was to get John to subjugate his loan of 70,000 behind a bank loan of 40,000. John would object to this naturally. However you could point out that we didnt haggle the price down to 130,000, and maybe even 120,000, but we will pay the full 140,000. But if you secure a 20,000 by mortgage on the business, John, you will only have to pay the 20,000 to take back the business if we default, which probably in reality represents the difference between the 140,000 and the reduced price of 120,000 you probably would be willing to accept. John agreed. It would be no trick to get a bank to loan 20,000 with 140,000 business as solid collateral. Our financial pyramid began to take shape 20,000 bank loan secured by a first mortgage. 70,000 sellers loan secured by a second mortgage. 30,000 assumption of sellers liabilities. 120,000
Having negotiated for half an hour we had already secured a hundred and twenty of the one hundred and forty thousand, leaving 20,000 to achieve.
The top of the financial pyramid is in sight. The next step was to approach Johns suppliers, where the owner ran a cash account. Ask for a 60 or 90 day account, which will probably give you another 5,000, leaving you 15,000 to go. Barrington Robinson All Reserved - offlinegenie+support@gmail.com 8
The restaurant had two cigarette machines provided by a vending company, which earned John 8,000 in commissions. If the vending company would advance John 5,000 he would extend a two year concession lease, and the vending company could collect this amount from the commissions due to the restaurant. Rather than risk losing the location, the vending company agreed.
The financing gap narrowed further. We now had 130,000 in place. But we still had 10,000 to go. Quickly calculating the business grossed about 10,000 a week in sales, the buyer proposed that John take an additional 5,000 out of receipts instead of paying it to creditors. This increased the assumed liabilities from 30,000 to 35,000. For the final 5,000 the buyer said I will give you my personal cheque, if your attorney will hold the cheque in escrow for a few days until the funds clear. The buyer knew he could borrow the 5,000 he needed to cover the cheque from the sales in the restaurant once he took over ownership. So the deal was struck and within two weeks the buyer became his own boss, and reports record sales from his own restaurant.
Now lets review the financial pyramid. 20,000 bank loan. 70,000 seller financing secured by the business. 35,000 assumption of sellers liabilities. 5,000 supplier financing. 5,000 advance commissions. 5,000 business cash flow to cover buyers cheque. 140,000 total.
LESSON 3 : Ignore down payment demands

Pretend the words down payment doesnt exist, because in reality they have no meaning when it comes to structuring your 10000 financial pyramid. Here are two reasons why: 1. A seller quotes a down payment demand based on his perceptions of what is needed to finance the deal, and the financing blocks available to finance the deal. 2. A seller quotes a down payment to tell what he wants to walk away with at closing, not to tell you where your financing blocks will come from. The words down payment means positively nothing except that the seller is trying to dictate what must come out of your pocket to satisfy his or her idea of a financial pyramid. For example a seller may put up his business for 150,000. He does some quick calculations and concludes that the buyer can obtain a 50,000 bank loan and he could finance another 50,000 leaving the buyer to find 50,000. The buyer may try to negotiate the bank up to 50,000. The buyer may assume sellers liabilities of 15,000, and give a cheque for 5,000 to be held for 3 weeks whilst the buyer collects the money from the cash flow of the business. The buyer may talk the seller into a further 10,000 of financing making a 60,000 seller loan. The buyer may re-negotiate a higher bank loan with another bank to 70,000.
The financial pyramid will now look as follows: 70,000 bank loan (increased from 50,000) 60,000 seller financing (increased from 50,000) 15,000 assumption of liabilities. 5,000 from business cash flow 150000 total.
If it doesnt happen as mentioned above, then we just design another financial pyramid using still other financial blocks that will be available. There are literally thousands of possibilities and accommodations available to you. Perhaps another bank will lend 70,000 if the existing bank wont. Whittle away at the price using smaller financial blocks.
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LESSON 4 : Make your own miracles

When dealing with this business, try brainstorming. Some of the ideas may seem stupid, but out of it will come creative solutions. One imaginative man always came up with a barrage of possibilities. Lets sell stock in the company. Lets lease out the basement. Lets rent out the side wall and roof for advertising space. Lets sell memberships to everybody in town for 10 a member, where they would be entitled to one free dinner for every dinner purchased. Imagine selling 4000 memberships like this. Lets sell off some vending areas.
And so on
LESSON 5 : The deal dictates the financing

Each deal will have different assets. For instance one business held patents and copyrights on its designs and sold these off in countries and in various areas to others who wanted to manufacture and market them. They also received undertakings for royalty payments which were bankable. Other businesses had good leases in prime positions and were able to lease off concession stands. Others had a unique food or food combination which could be franchised off. These are just some of the areas that could also be looked at. All these ideas could be added to the financial pyramid.
LESSON 6 : Build a strong financial pyramid

The best financial blocks: Provide the longest payback period. Carry the lowest interest rates. Require little or no collateral. Demand no personal liabilities.
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No one source of financing will display all these characteristics. Bank loans offer long payback period, but require personal liability on your guarantees. Taking over sellers debts ordinarily avoids personal liability but may require a fast pay back and strain cash flow. Partnership funds overcome each of these unfavorable points, but require you to give up equity in the business.
LESSON 7 : Can it really work for me?

Every approach to no cash down deals outlined above can work for you. Every case proves that many others with no unique talent bought successful businesses without cash. There are thousands of others who have landed their own business using the same No Cash Down formula. But most importantly you have to believe it can work for you. You have to do what many others have done and that is practice. One man persevered, making 32 offers on businesses before he struck it rich with a deal worth 2.5Million.
LESSON 8 : Example
RAISE 600,000.000 TO TAKE OVER A FREEHOLD HOTEL: - Cash flow 900,000.00 pa - Hotel has two bars, 100 cover restaurant, well equipped gymnasium with sauna and swimming pool, 40 rooms, 2 x Conference rooms. Located in town centre with parking for one hundred cars. 300,000.00 - l00% loan against bricks and mortar @ 10.00 100,000.00 - Seller financing 7 years at 6.5% 1 10.000.00 - Avelising @ ll% 60,000.00 - Re-leasing of equipment @ 10% 30,000.00 - Assumption of seller liabilities interest free 10,000.00 - Business broker interest free for one year 20.000.00 - Supplier financing at 0% 20,000.00 - Borrowed from cash flow. 5,000.00 - For one years advance rental for vending machines. 9,000.00 - Lease of 25 car parking spaces in advance for the year 8,000.00 - Sell 400 @ 20.00 memberships in restaurant 60,000.00 - Sell 200 memberships in gym @ 300.00 on negotiable promissory notes 8,000.00 - Sell combined parking/restaurant/Gym membership to 25 regs @ 320.00 70,000.00 Investment by partners Barrington Robinson All Reserved - offlinegenie+support@gmail.com 12

40,000.00 Bank loan 10% 20,000.00 Lease out conference facilities in advance on Negotiable promissory notes 5,000.00 Sold right to advertise on serviettes & table cloths. 875,000.00 Excess on requirement of 275,000.00 Average interest on this total amount is 5.88% or 51,500.00 p.a. 4291.66 a month Referring to your professional adviser on all matters, use some of the excess funds to purchase your second hotel or business using the same methods. Each method is different but each have in common raising one hundred percent of the purchase price using capital from sources other than the buyers own cheque book.
Here is another example of a cash pyramid. Put the biggest items in your pyramid first. Seller Finance Bank Loan Secured by business @ 11% Assumption of sellers liabilities @ 6% Loan from suppliers Investment by partners Re-leasing of Equipment 7% interest Loan from Business broker Borrowed from business cash flow Personal loan @11% Holding Company shares to seller 2.5% Sale of 400 memberships @ 20,00 Lease out Kitchen after hours for 6Months Start selling x 2 Franchises across country Sell advertising 2yrs on Table Cloths/Serv 40,000.00 40,000.00 20,000.00 15,000.00 20,000.00 25,000.00 3,000.00 10,000.00 7,000.00 15,000.00 8,000.00 4,000.00 50,000.00 3,000.00
TOTAL
260,000.00
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Engineering concern producing Trelli Dor Security gates and specially developed opening and closing gates for driveways and factories etc. Both items are patented. The asking price for the business is 550,000. It has a turnover of 1,250,000.00 and a net profit of 20%. Assets, including machinery and trucks are valued at 180,000. Seller Finance Bank Loan Re-Finance of Equipment Assumption of Sellers Liabilities Loan from Suppliers Partners 20% payment Seller receives 300 in holding Company valued at 800,000 Borrow from business cash flow Personal Loan Loan from Business Broker Sale of 2 x Franchise/Royalty/Manufacturing rights Sell Manufacturing/Franchise/Royalty rights into foreign countries Discount bills for 6 months guaranteed royalties @ 80% Rent out storage area Sell all 7 x Installation trucks to new SubContractors Sell all 4 reps cars to them Total 150,000.00 110,000.00 100,000.00 90,000.00 70,000.00 110,000.00 80,000.00 40,000.00 10,000.00 5,000.00 110,000.00 110,000.00 50,000.00 10,000.00 30,000.00 28,000.00 1,103,000.00
Key Points Anyone can buy with no cash down once they know how. Price is only a number - you reach it with creative financing. Build your financial pyramid one step at a time using everyone elses money. No two deals are alike. Match the financing to the deal. Design your own pyramid - sellers do not think in no cash terms. Always start from the ground and work your way to the top. The seller can receive his money with no cash down deals. Use creativity to find your building blocks. The no cash down formula does work if you believe in it and effectively use it.
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Men from the East
These are people who you may appoint; who go in to make offers on a business or property that may be overpriced. This way you can test the lower levels of the price the seller is willing to accept without you being present. It is also a way of physiologically getting the seller to accept that he will be getting a lower price. When you come in and offer a slightly better price than all those who have gone before, but lower than the seller was originally asking, he will probably be primed to accept.
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Financial Tools
Financial tools are about creative finance and can be anything that furthers your case to acquire or take control over a business. The following extensive list is by no means the end but the beginning. Day after day people come through to ask me whether an idea will work. Whilst it is difficult to make an off the cuff decision, my answer is always to try it.
Two Name Paper or Guarantor

Bankers love this because they have two signatures to back up the loan, consequently the banker is more certain of getting paid. Get a supplier or your seller to sign. The seller could be one of your best people to get to sign the paper after all he will receive any money that is coming to him, plus he will have guarantees in respect of the business. Recently one of our delegates took over a business and obtained such guarantees from the seller. If the seller wants to sell then he is going to have to consider signing to help smooth the way to a sale.
LIC (Letter of Credit)

In a letter of credit the lender substitutes his credit rating for yours. L/Cs come from: Commercial Banks. Export - Import banks and lenders. Commercial finance firms Factoring firms Certain government- sponsored banks abroad (especially export) Private lenders of various types.
A letter of credit from one of the above sources can enable you to move quickly when trying to close a deal. It can be almost used like cash because the seller can anticipate actual cash in the event of you defaulting. This instrument will give you a big advantage over other buyers because it will impress the seller and his assistants and as a result will add credibility to your dealings.
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Factoring firms
Certain government- sponsored banks abroad (especially export) Private lenders of various types. A letter of credit from one of the above sources can enable you to move quickly when trying to close a deal. It can be almost used like cash because the seller can anticipate actual cash in the event of you defaulting. This instrument will give you a big advantage over other buyers because it will impress the seller and his assistants and as a result will add credibility to your dealings.
Visit Your Banks.

If you want to be a deal maker you should be in front of the bank manager doing presentations up to 90% o of the time. Try another approach. Instead of asking for a loan say I am looking for a financial partner to take our business onto the next step in its development. I do not want a deposit relationship. I want a full relationship with the bank which includes overdraft facilities, foreign exchange and leasing plus I want to attend your various functions. The functions will enable you to strike up relationships and therefore contacts with people that the bank regards as important to their business.
Always Use The Correct Bank

One of the most helpful financial tools which we can recommend is the Money Facts Monthly Handbook of Business Finance (UK only locate a similar type of publication for your country). It is important that serious LBO players take a subscription in this magazine because it clearly lays out what type of loans the various banks are involved in. For instance if you wanted to make a loan on a garage you would be able to find out which Bank during this period regards it as their favourite type of business, or which bank will give up to 100% loans on nursing homes during this month. All this is clearly laid out in MONEY FACTS in respect of the main categories of business. This type of information can help you stop wasting time doing presentations to banks which will not under any circumstances do business with you during that month, because what you want to open doesnt fall into their loan criteria for that period. What must be understood is that the situation changes month to month, so you will need a subscription.
To Make Money You Must:

Get control of a sum of money. Make good choices as to how you will use the money Pick profitable projects. Keep constant watch over the project in which the money is employed.
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Ways You May Get A Loan After Being Turned Down.
Get a friend, business associate relative or seller to co-sign your loan application. Get a professional co-signer to co-sign your application Borrow collateral such as stocks, bonds, real estate, etc Rent collateral from firms wanting a better return. Get and use a contract for future payments as collateral for your loan. Get a lender to guarantee your loan so you can borrow more from others. Obtain a second mortgage on property to get a 100% loan
Bankers Acceptances/Avelising
A Bankers Acceptance is a promissory note which you give to the bank when they loan you money. The bank in turn sells the note to a depositor, person or firm. Lets say you borrow 50,000.00 at 12% interest. Then the bank sells the note to a depositor for 119 days @ 1000. The bank keeps the difference in interest of20o in this case, and gets back its 50,000.00. which is loaned to you from the depositor. Thus the bank has its 50,000 back and can lend it to someone else. Bankers call this making money on money. You get into Bankers acceptances through your local bank. If you are happy to pay the interest the bank will usually be happy to roll the loan over.
Holding Company
Offer the seller shares in the holding company. You must sell the dream by showing him how you intend to grow the business fast with the object of taking the whole thing onto the stock exchange in three years at which time he will walk away with big money in his pocket. Giving away equity which costs you nothing or very little, but it can help you take over huge businesses for little if he goes along with your proposition. For instance if you did not have a portion of the money to take over a business you could offer the seller 500 in your Holding Company if it was valued at say 100,000.00, to satisfy his requirement for a 20,000.00 payment which you dont have. See end of this manual for an example of a holding company.
Here are some good reasons to borrow money.

Speed Interest is usually tax deductible Much less work Help others by putting the money to work Thousands of money sources Get more later Pay off time can be extended Loan costs are low Little or no selling is needed
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No fees are required by most lenders Financing is possible. Loans carry built in motivation Loans can be used in almost any business
Borrowers are welcomed by the best of lenders
Getting Money from Tax Haven Lenders

Use offshore tax havens. Successful people often have access to funds the normal person seems to ignore. The tax havens are a logical choice because volumes of money are deposited with them and it has to be used so that it can attract interest.
Getting Money from a Tax Haven:

It is estimated that on the Netherlands Antilles there is up to $450 Billion lodged in the banks. It is currently estimated that there is more money going through the Cayman Islands than New York on a daily basis. With this type of money available they have to have a use for it in order to generate interest. Major libraries usually have copies of the Bankers Almanac in which you can find out all the major banks in the world.
Getting Money Off-shore:

Is often easier than from local sources. Can be faster than from local sources (but isnt always) May be easier for unusual products Usually involves fewer people. Can usually be done via mail or cable.
There Are A Number Of Major Tax Havens: The Cayman Islands Nassau, The Bahamas Bermuda Panama in the Canal area
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Liechtenstein Switzerland Certain Pacific Islands Jersey Nevis St Kitts
Get A List Of Tax Haven Banks And Financial Institutions Write to each tax haven institution outlining your project and the amount of funding needed. Give details on how the financing is to be repaid, and the timing of the payments. Furnish details on who you are, your experience and the accountants, lawyers and other people who will be assisting you. Supply photos, drawings and other data that might help in their decision. Always find out if the lending institution you are approaching is in lending mode and what their preferences are. Most tax havens will not deal with loans of under 100,000 Real estate and other business loans are the only types of loans considered by havens. Be business like in all your dealings - it can mean acceptance.
Negotiable Promissory Notes Have a lawyer draw up your first Negotiable Promissory Note. Supposing you want to sell a service or item for 1,000.00 . To speed up sales offer the client to pay $100.00 in cash then allow him to pay over a year or two. Take the note/bill to a discounter and he will pay you up to 80% of the face value. What are Emission Rates?
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What does Emission mean? It means that if you borrow 100.00 you will only get 92.00. The higher the emission on your loan the more money you get. 00 98 96 85 98 96 85
How To Borrow Money Without (It Collateral, Credit or Capital? When you dont have money you need co-signers. These can include friends, relatives, other businessmen or you can find them by placing an advertisement in business magazines, national and local press or the internet. Start looking now before you need the money - it helps. Dont wait until you need the money.
Venture Capitalist
Make bigger loans and are usually companies The British Venture Capital Association Essex House 12-13 Essex Street London WC2 3AA Tel 0171 240 3846 Fax 0171 240 3849
Business Angels Make smaller loans and are usually individuals. Private loans for business loans for your deals. Try private lenders. Offer them a better rate than they can get from the bank. You can offer them security by Avelising (see Avelising). Avelising will cost them a few percentage points but because of Avelising the return of their money is guaranteed by the bank.
Commercial Bank
*Definition of a commercial bank
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Commercial banks are designed primarily to finance the production, distribution and sale of goods i. e. to lend short term funds as distinguished from the service of lending long term or capital funds.
Compensating Balance Provides Great Leverage:

Encyclopedia of Finance Definition Compensating Balances connection with the extension of credit to a borrowing customer, the customary practice of commercial banks is to require an average balance of usually about 200o of the amount of the loan. Thus, when a loan is made to a customer s account, the customer may draw up to 80% of the amount of the credit.
The usual ratio of loan to deposit is 5x the deposit at the bank. For example 20,000 x 5 100,000 loan. Sometimes this figure can go as high as x 10.
Loans From Private Lenders:

1. Can be obtained faster 2. Will usually cost you little more 3. Are short - 5 years at the most strain on cash flow. 4. Seldom involve credit checks
Are mostly for real estate, however Avelising can increase this percentage can range into millions.
Here Are A Few Loan Hints

Find out what the loan companies preferences are Pick your lender based on the type of loan you want. Identify the name of the chief loan officer with whom you should be dealing. Write a full history of yotir business. Do future income projections. Otherwise have a pro-forma statement done by your accountant. Apply when you are ready. Negotiate all the terms such as the amount, the term and the interest rate.
Time deposit method.

This is one of the most helpful of tools. This is where a lender, who takes no risk, deposits an amount of money in a savings account. This money is put there purely to boost your credit rating. It is not an offset against your loan. It is there purely to enhance your credibility. Also you assume no responsibility for this amount. However it may enable you to get the loan you are seeking.
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Advantages of Time Deposit Method
1. No contract is needed for deal 2. Charges made are usually tax deductible. 3. The loan can help you expand 4. Your credit rating remains high
Types of properties Insurance companies prefer:

Farms Blocks of Apartments Commercial structures Leasehold properties Industrial factories and buildings Garages and parking structures Office buildings and industrial structures Motels, hotels, and recreation centres Chain stores and gas stations Hospitals and nursing homes Churches and synagogues
Take a second mortgage or re-mortgage your property. Easiest way to raise money quickly. Never forget your home as a source of funds.
The best finance Open ended loan

An Open ended loan is where the lender approves a loan for more than you originally requested. For instance if you want an amount of 150,000.00 but the lender approves 200,000.00. This can give you wonderful flexibility.
Blanket loan
This is a loan that covers the property. Lets suppose you have six buildings, roads, a dam and a mill on the property. You will be able to use this loan at your discretion. This makes it much easier. These different types of loans help make it easier for you to understand that there are many types of loans you can negotiate for.
Standing Mortgages to help you make money in real estate. A standing mortgage is one that is paid off over a number of years. The capital amount is not paid back until the end of the loan. Supposing you had borrowed 100,000.00 at 80o then you would only pay the interest at 8,000.00 per year. At the end of the last year you would pay the 8,000.00 plus the 100,000.00 or you would re-negotiate the loan. You would either then pay more or less interest on the re-negotiated loan.
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THE IMPORTANT POINTS ABOUT STANDING MORTGAGES ARE:
YOU ARE BETTER OFF BECAUSE YOU HAVE: Control of an income property which earns money for you, while You probably have not put up any cash of your own but you are getting income, while Your payments (usually only once a year) are low, compared with your income, and Your property can be going up in value during the term of the standing mortgage, and You get income-tax deductions for the interest you pay out, while you also get Depreciation deductions, further saving you on your income taxes.
Where will you flit d such mortgages: Insurance companies Private lenders Look in the Yellow Pages The reference section of the library Attorneys Tap one of the largest Blocks of money in the World
Where are the largest blocks of money in the world today? Many people think that they are in the Arab world - Morocco, Algeria, Libya, Egypt, Sudan, Syria, Jordan, Iraq, Iran, Saudi Arabia, Oman, Dubai, U.A.E, and Sana a. So would it be possible for you to get any of this oil money for your business? Yes, it might be possible - if you approached the organisations by mail and presented them with:
A good business description Estimates of future income and profits A statement of the amount of money you need Plans and timetables for repaying the money
To start your search for oil money, take these lucky steps now and watch the results you get: Get a list of Middle East and North African banks Decide which country might like your business deal Write to all the banks listed for that country. Go to your main library and get the names, fax number, telephone number, address and main officers in the bank from the previously mentioned BANKERS ALMANAC
If you dont get the results you seek try another country Barrington Robinson All Reserved - offlinegenie+support@gmail.com 24

Keep trying until you get the money you need
Getting Arab loans often requires:

A local partner in the state concerned He will help you with local laws, customs and procedures. The partner only gets a fee You can get names of suitable agents from the banks Dont change agents. Pick your agent carefully
Don t forget, you can get lists of foreign banks in the reference section of the library In the U.S alone there are over 10,000 banks. The total worldwide figure is far higher than that. You will consequently have a far better chance of raising the loan you want even if you fail locally.
3 steps to loan success

Leave the amount out of your application. Allow the loan officer to suggest what the loan should be. Always be courteous even if your application is turned down. It is not unknown for the bank to return and offer the loan. But if you burn your bridges with a bad attitude they wont.
Suggested projects:
Income producing real estate Manufacturing plants making important products Transportation, shipping and airlines Banking and other credit services Wholesale and retail food Printing businesses Big shopping centres Manufacturing firms needing expansion cash Office buildings.
Bring together the money sources and guarantees Find out how much you need Get names of suitable lenders. Ask if the bank or loan institution you are dealing with are in lending mode Ask the lenders if they loan on your type of project and how much they will loan Learn what guarantees they want Take steps to get the security they want Barrington Robinson All Reserved - offlinegenie+support@gmail.com 25

Think of ways to get the security they need Use unusual and offbeat ways to get the security.
Suggested sources of guarantees Banks Avelising Commercial lender or finance co. Loan company Individual with a job, business or assets Insurance companies & Pension funds
Why do the above want guarantees? Making a guarantee doesnt cost anything It requires no outlay in cash with a safe loan a guarantee is never enforced. Five steps to obtain a guarantee. Prepare a short description of the business, say a page at the most. Project the turnover for five years List all the expenses you anticipate over the next five years. Briefly describe your experience and any associates. If management is in place briefly describe their experience and qualification. List the money you will be requiring over the next five years.
Get the seller to guarantee your financing

He is the obvious person to do this since if he is a motivated seller he could prove to be the easiest mark because he has faith in the business as he knows it best plus he will be the one who will be receiving any payments from the sale. He will also be receiving the business back if things go wrong so he has least to loose. The other great advantage is that his guarantee will cost you little or nothing, where others supplying the same guarantee could cost you up to 1500 and more. Second mortgages over property Raise a second mortgage over property to make up a shortfall in funds. This is OPM (Other peoples money). Because you are using money which belongs to others. What can creative skills achieve Makes you the owner on a going business for signing a few papers. Gives you a big income fast, maybe in a couple of weeks Barrington Robinson All Reserved - offlinegenie+support@gmail.com 26

Allows you to pyramid your wealth into new profitable projects. Debtors Debtors can be discounted with factoring houses. It may be worthwhile to come to an agreement that you collect his debtors for a fee after he has handed over the business. The fee can be used to offset the purchase price. Asset Development Where one is short of collateral why not place an advertisement in the paper LIVE RENT FREE Phone Offer applicants a rent free situation provided you can use their properties as collateral. To sweeten the deal you may have to offer them a better than usual rate. So if someone owns a property worth 250K with only 30k outstanding then the 220K may be acceptable to the bank. If you want 500K then you may require two or three properties. In the case of the 220K you may be able to offer him 1800 a month. You may also offer these people equity in the business. Other sources of Assets that can be used Luxury cars, Boats and aircraft. These items are usually slow to move, especially in a recession. To offer to pay the loan costs or a monthly fee may be worthwhile for the owner to participate. Bartering: The easy option? Under certain circumstances one could join in a barter deal. This could be for exchange of assets, goods or services and is designed to overcome a short fall in the price. For instance one may be short of 10,000.00 to make up an overall price of 200,000.00. It may be agreed that you will give a car, caravan, land, shares or some service of equivalent value to make up the shortfall. Raise Loans against anything you have Raise funds by refinancing things that are paid up. This includes cars, planes, antiques, yachts or anything that has value that will raise the funds to close. Self-Liquidating Loan. This concept is rarely used but can be useful if you have deals in excess of 10Million. Here you ask the seller to raise a line of credit against his business or some assets. The funds are lodged in a blocked account. They are then put into a program. These programs have high returns which mean than in 180 days a large part of the original loan can be liquidated. If the final payment can be delayed till after the end of a year. Experience has shown that the right program will completely liquidate the loan and the asset may be free and clear. The seller has to play a full part in this program and be kept fully informed. It requires the purchaser to identify a valid program that gives proven results. Different types of financing between businesses 1. Negotiation of extended credit from say 30 days up to 90 days or more. Barrington Robinson All Reserved - offlinegenie+support@gmail.com 27

2. Consignment stock which is only paid for when sold. Even organise this payment for 30 days or more. 3. Inventory sold with a trust receipt which may or may not bear interest. 4. Inventory supplied using a trade acceptance . This usually bears interest. 5. Your accounts receivable financed by the supplier. 6. Inventory sent to you and secured in a bond warehouse until drawn. 7. Your accounts receivable financed by supplier through a factor. 8. Supplier lends equipment to you. 9. Supplier leases equipment to you 10. Supplier sells you equipment by financing it over a long period 11. Cash loan to you to supply goods from supplier, or supplier co-signs note on a loan. 12. Short term note to you 13. Term note to you 14. Term loan to you for any business purpose. 15. Cash investment in your business by the buyer. 16. Sell off of site in shop. 17. Rent out shelf space in supermarket to suppliers. They pack their own shelves. 18. Outright purchase of the entire business.
Professionals know a bank views the loan application based largely on these three points:
1. Character. Do you have a history of good credit? 2. Cash Flow. Does the business offer sufficient cash flow and profit after expenses to pay back the loan? You may have to prove the numbers work. 3. Collateral. What collateral is there if your loan goes into default? Will the bank have sufficient collateral to recover the balance owed.
To overcome these concerns draft your own professional loan proposal.

1 ) Credit and Personal History (character) Name and Address Family status Barrington Robinson All Reserved - offlinegenie+support@gmail.com 28

Employment history Experiences in related business Education Personal assets Personal liabilities Military status Bank References Credit References 2) Financial information on the business (Cash Flow) Brief Description of the business Brief history of Business Tax returns for two years Projected cash flow statement for loan period Summary of proposed business changes Lease or proposed lease terms. 3) Collateral Business Assets Acquisition cost or replacement cost. Liquidation value of assets 4) Proposed Loan Amount required Loan period Interest Terms Identification of Guarantors Collateral to be pledged.
Addressing these points provides the banker with everything he needs. When you present him with this information he knows he is dealing with a professional. Have your accountant prepare the financial information. He may feel more comfortable with this. Make sure the numbers work. If your loan requires payments of 2,000.00 monthly and your cash flow shows only 1000.00 being available then your application will fail.
When the Bank says NO

Find out if you can what the flaw is. If it is terminal, drop the idea of buying that business. If you still believe in the project, try and find out what they feel the problem is. If not, get together with your accountant to see if he can detect the flaw in your proposal. Then if he gives the all clear hawk it from Barrington Robinson All Reserved - offlinegenie+support@gmail.com 29

bank to bank. If you still get turn downs talk to professionals in the industry. Push all your bankers for reasons why. The project may be a lemon so best to get out of it. Go onto something else.
Negotiate the best loan terms.

1. Interest 2. Demand the longest loan period possible 3. Pledge only the business assets as collateral 4. Dont falsify your loan application. 5. Dont grant additional collateral. 6. Dont borrow personally 7. Dont settle for the first loan offer
How to borrow a Down Payment from a bank

Down payment loans are short term. Never disclose it is for business. They turn you down every time. Why? Because they are conservative and believe that a business buyer should invest 40 to 5000 of their own funds towards the selling price, Of course if every entrepreneur followed such advice then some of our huge industries would not be here today.
The reasons you need a personal loan:

1. You need cash to remodel your house. 2. Your wife needs plastic surgery 3. You are going back to school to get your masters degree.
Should you need a bigger loan: Try multiple loans from various banks. Be ready to pledge personal assets: Stocks, Life Insurance, Automobiles, Bank books Persuade friend or relative. If you borrow say 30,000.00 to purchase your business, repay yourself as soon as possible from the cash flow and take the money and pay off the loan. Once you have achieved this you have done a no cash down~ deal. 30 day loans are a form of Bridge financing Repay them from the business cash flow by Selling off excess inventory/stock Ask the suppliers for 60 days Defer your own salary. Points to remember Barrington Robinson All Reserved - offlinegenie+support@gmail.com 30

Seller Financing beats bank financing Banks are all different. Try and match your deal to the right bank. The three Cs - Credit, Cash Flow and Collateral. Know how to structure a deal and you should achieve 10000 financing. You are worth more than you think. Your signature may get you the money you want.
Partners? Only take them on if you know that they can handle problems. If they are difficult to deal with before becoming a partner you have no idea how bad things can become when they become a partner. Professionals in the industry could be a better bet. To find capital: Put your lawyer and accountant to work Advertise in capital needed columns. Promote your deal. Tell everyone. Beware of little old ladies in Tennis shoes. Not a good idea. Their investment objectives rarely tie up with yours. Avoid close relatives. Run away from emotional cry babies. Hunt successful retirees who have succeeded in the same type of business. People who benefit from your business. Suppliers.
Positive elements a Venture Capitalist looks for: Marketable product with long term need. Management team should be successful! professional in their approach and have solid business backgrounds. Entrepreneur should be willing to invest in his own venture. Business plan should be realistic. Going Public Sell shares on the aim market and make millions. This is a whole section by itself and you should contact the aim market for details.
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How to turn a sellers nightmare into a dream business?

There is no such thing as a bad business. Just bad management. Recently we were called in to see a shop whose owner was approaching 70. Even if he wanted to close the business because of lack of a sale, he couldnt because he had a long lease on the main shop which he would have had to pay. The business was very busy and had footfall (customers) in the shop which was ongoing and surprisingly busy. Outside deliveries were an unexpected plus, yet the business was not making the profits that it clearly should be making. The outside deliveries were a growing side of the business. The customers visiting the shop had decreased. He was not doing any outside promotion other than Yellow Pages. It had an annual turnover approaching 600K per annum. On looking around, after having asked the owner many questions about the business and after having taken copious notes we went away to consider the proposition. Firstly the owner was by his own admittance past it. He desperately wanted out but had had no offers to buy because it was considered too complicated. He was willing to do a deal with the devil. He had reduced the price to this end. First and foremost he was running a split operation. His best staff were located in the other small business which was situated at other premises about 150 yards away. His main business consequently had had to employ more inexperienced people and a manager to help him cope. The shop floor was over stocked and looked overcrowded. A basement area which could easily have been used for sales and display was being used for stock. He had a large office upstairs which could have been used for stock and later on as the business developed also used for display. He had a further room to organize the deliveries. All these rooms were short of shelving. He had good contracts and a unique business concept yet he was not developing it because he had enough. Our decision was to close the smaller shop and leave a sign together with a map in the window showing the way to get to the other shop only 100 to 150 yards away. Offer better discounts on the college books as a result of the savings affected by closing the smaller shop. Move all the stock from the smaller shop to the downstairs basement area. Reduce staff by two. Also move a portion of the overcrowded stock in the main shop down stairs. Include some seats and chairs in the now less crowded shop, so that people could brow se in some comfort. Inaugurate a monthly promotion campaign to existing clients and take more names as clients come in to include on the database. Activate a Web site and promote it on every promotional piece including invoice and Yellow Pages. Focus on boosting the growing delivery side of the business. Re-negotiate the shop rent with the landlord. Put spot lights in the window to attract attention. Barrington Robinson All Reserved - offlinegenie+support@gmail.com 32

Introduction of more profitable lines.
These were just a few of the changes which would not only enhance turnover but increase profits significant. But the most important thing was to let the present owner out because he wanted no more of the business. Three proven ways to detect if a company is in trouble: 1. Visible signals 2. Financial Statements 3. External Information What to look for: Shortage of stock Slovenly attitude Abrasive to customers Offhand attitude by staff. Manager/owner never at business, always to be found at the race track or pub Business located in wrong area. Acquire it for pennies, relocate to a better locality and sell it for a huge profit. Illness and human weakness can destroy a business If you have a business problem rarely can you rely on your accountant or Lawyer to help. For example in one of my businesses I was doing a huge turnover, but the costs were starting to exceed the cash flow. The accountant had no remedy, but confirmed that I had paid and got in more stock than I needed. My answer was to redesign a new structural system which saved me 60,000.00 per month. I threw out pop rivets and their guns and compressors and replaced them with self tapping screws. This also saved on drill bits. I also changed the way I was advertising which saved me another 30,000.00 per month. I changed the way my product were painted and saved on twenty staff. The new structural system saved on 50 staff plus we started to supply agents and franchisees throughout the country. All this returned my business to huge profits monthly and enabled me to clean up the opposition. The lawyers and accountants could not advise me on these things. They could only confirm thai the historical books were correct at the time. They were amazed at how I turned the business around. What me in trouble? This is the best business since sliced bread????? Very few business men will admit they are in trouble. Don't therefore try and back him into a corner. Many have tried to. Rather flatter him. Build him up. Make him eat out of your hand. Tell him how you want to build on what he has already done. If a company has 150.000 in assets and 150,000 in liabilities
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What should you pay the business? Clearly L
Put Cash In His Rocket.

Offer him payments over a couple of years, even offer him employment.
Formula for takeover of problem companies

1. 2. 3. 4. 5. 6. Calculate outstanding debts. Agree to accept debt for all or part of the purchase price. Leave the seller where possible as the guarantor to the debt as well. Supposing the debt in a business is 150,000 and the assets add up to only 100,000.00 Who wants it? Reduce the debt to 30,000.00 through negotiation with creditors. Along the lines. If we let the company go bankrupt you may get 5,000.00. If you allow me to continue you will get this 30,000.00 over the years. 7. Alter paying the creditors you still have a business worth say 70,000.00. Raise a loan against this. So you still have equity in die business of 40,000.00. 8. To back up your belief of what the assets are worth find an auctioneer to give an assessment.
Points to negotiate on
Price Business assets to be sold Duration of Financing Interest on notes Security for notes Personal guarantees on notes Sellers agreements not to compete Assumed liabilities Brokerage commissions Closing dates Leases Of the seller is the landlord) The seller's guarantees. % financing by seller Duration of seller financing Assumption of sellers debts
10 rules for successful negotiations
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Investigate seller position:
Find his motivation why does he want to sell? Identify his problems and pressure points. Always bargain from his point of view.
Say I can see your problem Looking at it from your point of view How can we make this deal fit with your needs, do you have any ideas? LISTEN DON'T TALK When you listen you pick up valuable clues. When you talk you tip your hand. Encourage the seller to explain his situation. Ask questions. Draw your opponent out. You will not only receive information useful in negotiating a better deal but helpful to improve your relationship. DIVIDE AND CONQUER BY ADDRESSING MULTIPLE ISSUES ONE AT A TIME. Where multiple issues exist or where multiple problems exist, separate them and discuss and resolve each individually. Larger problems become more manageable when divided into their smaller component parts and each part can then be considered individually.
ADDRESS EASY ISSUES FIRST AND PUT PROBLEM ISSUES OFF UNTIL LAST.
Don't get stalled on one particular issue or on one aspect of the deal which is the most difficult to resolve. WORK WITH THE SELLER TO CREATE A JOINT SOLUTION Encourage the seller to participate in the proposed solution. Draw him into die process. Work with him to identify the problem. Ask his advice. Literally work together with the seller so both parties can feel an ownership in the solution. PUT YOURSELF W THE SELLERS POSITION Consider the seller's point of view. Does your proposition satisfy his needs, goals and objectives? What are the alternatives to satisfy those needs and thus create an acceptable deal for the seller as well as for yourself? DE VEL OP MUL TIPLE SOLUTIONS Walk into negotiations with all the possible alternatives in mind, but don't rely on your solutions alone. Ask the seller for his idea on the processes for resolving issues you cannot resolve between you. Neither you nor the seller should be limited to your own solutions. Brainstorm with advisors and associates until all the possible solutions are explored and discussed.
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DEAL ONLY WITH THE DECISION MAKER Don't engage in two step negotiations where your opponent later clears e\cry point with a partner, attorney, spouse or other alter ego. Find out in advance whether your opponent shares your authority to make a deal and if not insist that the decision makers be present at negotiations.
BE PATIENT Make the element of time work for you, not against you. If you suddenly have a sticking point in your negotiations If suddenly you find your seller sticking on one point, leave that subject immediately and go onto something else. Get some more yes's. Then return to the original sticking point. If he still seems to object once again go onto something else. Keep doing this until he accepts this one original sticking point. If he still digs his toes in then you will have to face up to this one and handle it. Start out by reviewing yours and his progress. Point out all the points of agreement and try and depreciate the significance of this problem in view of everything else.
Holding companies the best of free assets.

The big businesses such as I.C.I. American Express or B.A. simply swap pieces of paper called shares. Such equity is a painless way of taking over any business. The argument usually revolves around the value of the shares that are to be swapped. This will of course affect the proportionate share holding in the holding company. For instance if I wanted to purchase a company valued at 100.000.00 and 1 was 20,000.00 short, I may offer the seller a share in my holding company which will be worth in the near future 10 million making the present shares offer to him for his business valued at say 200,000. This would be a tenfold increase and it could happen in two years.
This is how it could work.

Assume that we have negotiated to a point where we have 20,000 outstanding on the deal. The seller has already been appraised of the fact that you have your money tied up in high performance instruments off shore for the next six months giving 20% monthly return on your capital monthly. Reluctantly you will allow him to have 10% of your conglomerate with an issued share capital of 10million which within two years will be worth 1 million. The 20,000 will then be worth 200,000 as you keep on taking over businesses during that time. He will therefore have a tenfold increase in his money. You have got to give him the confidence that you can do what you say. This usually emails giving him only enough information to whet his appetite and holding your council on details which could frighten him away from your proposals. Barrington Robinson All Reserved - offlinegenie+support@gmail.com 36

NATURALLY YOU WOULD NOT PROPOSE SUCH AN ARRANGEMENT IF YOU WERE NOT SERIOUS SO THERE SHOULD BE NO PROBLEM. HE SHOULD BENEFIT AS LAID DOWN IN YOUR PROPOSAL FOR HIS PARTICIPATION IN THE HOLDING COMPANY.
ACCOUNTS RECEIVABLE. Where a seller has accounts to collect after the transfer make it a part of your deal that he allow you to collect his outstandings for a fee of say 10% or 15%. If he has 40K outstanding then contact a discount company and find what they would charge for a loan against these accounts. They might offer you an emission rate of 85%. You would therefore have an interest free loan of 40K x 0.85 = 34K. Interest free because your seller is paying you a collection fee of say 15%. It may not always work out this way. He may only offer you 10% and the loan fee may be higher or Emission rate may be less.. The important thing is that you will have access to this money in the short term. As the money is collected the seller receives his share less the 10 or 15% collection fee and you pay the loan company from the money you borrowed. You may be able to replace these repaid accounts with others and keep your balance at a constant level thereby letting the business pay for your Loan. Always check up with your accountant to make sure that you are not getting into financial trouble. Make sure that your accountant doesnt have a knee jerk No response to everything you suggest. Many have found that this is a problem with their present accountants once they start creative financing techniques. Replace him with some one more open minded if in your opinion he is cramping your new style of doing business. BE PREPARED TO TAKE A WALK. Dont become emotionally committed to a prospective acquisition. You defined your limits on acceptable terms before you started negotiations and if an acceptable deal cannot be reached, be prepared to walk away.
Life insurance can finance your business

Use your policies to back up loans. Insure your life for the value of your shares
The Gradual Take Over

Staff take the business over from the retiring owner. This usually entails the owner allowing a reliable staff member to take over the business over a number of years, paying him back out of a share of the profits. Lease a business - a new take over trend Service businesses are ideal for this type of take over because they have few if any real assets. Banks will not fund businesses with only goodwill.
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Less control = More Control More control is less control - The case for many branches. There are many examples of this. Who has more money and time, the man who has one shop or the man who has twenty? He runs his businesses through a series of managers who have to give him weekly, monthly, quarterly and yearly reports. A glance from these reports will give you the picture of that business when related to the rest of the businesses or branches in the group. For instance if bad debt for the group were 2.500 then if one of the branches showed up on the report as being at 500, the local manager would be told immediately what he must do and when by. He will do it to keep his position in the group and his career intact. The businesses will be trading across a spectrum of successful and poorer areas. This way, optimal trading conditions can be developed. Careers to keep staff the secret of business success. Grantors promotes businesses at the door. I asked one of their directors how he kept their staff at such a difficult job. He said give them a career path. The banks do this and get away with paying their staff little. The retailers have done the same thing. So at the bottom of the pyramid is a huge lowly paid staff. Towards the top you have a group of better paid individuals and at the top comparatively well paid people. But if you had to average the total salary bill and divide it amongst all the staff the average pay package is low. Things might be a bit better now for individual staff, but that is only because the banks have cut their staff substantially. The banks, big retailers, post office and franchisers have epitomized the maxim of less control more control. This is true because the directors and shareholders often never see a branch yet it runs successfully. Why bring all this up? Because No Cash Down enables you to buy many businesses.
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A synopsis for sources of money

Building societies Insurance company Commercial Banks Investment Trusts. Insurance Companies Lawyers Pension Funds Individual Lenders including sellers Mutual funds Conventional Mortgages Family Loans Insurance policy loans Employer backed advances Finance companies Personal loan companies Second mortgage Car Loans Asset Finance Line of Credit (usually from a bank on an asset) Credit Cards Borrowing from a trust of which you are a beneficiary Borrowing against an inheritance Assuming, or buying subject to an existing loan Seller finance Seller backing for loan. Very good source for help. Giving Broker a note on commission he is owed. Checking account overdraft privileges Corporate finance as arranges for staff or participation in schemes such as the coal scheme. DTI loan guarantee scheme. Pawn brokers Selling stocks and bonds Cash in savings bonds Education loans such as DTI Career Development Loans Scholarships, fellowships. Government Grants Selling of land. Have owners of property loan them as collateral for which you pay them a fee. Boats, planes, helicopters, expensive and classic cars for collateral. Barrington Robinson All Reserved - offlinegenie+support@gmail.com 39

Options Venture Business Angels Venture Capitalists Investments Clubs Start your own investment group.
More Sources of Funds

Try to get every credit card you can get hold of so that you can delay payments. Spin out your bills making sure that you dont run foul of their accounts departments. Always pay something Check all accounts for overcharges. This also spins out the payment date by weeks and months and often results in reductions. Apply for property tax refunds. Have your Electricity, gas Telephone sewer and water utility bills checked for over charges. A large proportion are wrong. Have you bank account checked. Once again high proportions are wrong. Look for stashes of travellers cheques, and foreign currency which may be still awaiting to be collected. Sell personal property that is no longer required. Recover deposits left with landlords and utilities. File insurance claims for vandalism and theft. Collect un-collectable debts. If you have prepaid too much against your mortgage or loan ask for it be repaid Send invoices for sales or services not yet collected Pledge accounts receivable as security for a loan Sell the accounts receivable to factors Raise a bill and have it discounted on the discount market. Make an offer to settle long draw out lawsuits at a reasonable price now so that you can get your hands on the money which may be needed quickly. Tax Refunds
A Comprehensive checklist of seller warranties include:

1. Seller has good and marketable title. 2. Assets are sold free and clear of liens and encumbrances. 3. Seller has full authority to sell and transfer the assets. Barrington Robinson All Reserved - offlinegenie+support@gmail.com 40

4. Seller, as a corporate entity, is in good standing 5. The sellers financial statements present fairly and accurately the financial position of the company as of its date and there are no material adverse changes thereafter. 6. Contract rights and leases to be assigned are as represented and in good standing. 7. There is no material litigation pending against the company. 8. All licenses and permits required to conduct the business are in good standing. 9. There are no liabilities other than as represented. 10. The use of sellers name does not infringe on the name of any other party. 11. All equipment and fixtures are in good working order. 12. The buyer must think about every event upon which the deal depends, as the buyer is the one who imposes most of the conditions. 13. Licences and permits can be transferred. 14. There is no materially adverse change in sellers financial performance prior to closing. 15. All required letters are obtained, i.e. valuators, appraisers, other pertinent professional bodies, etc. 16. Satisfactory financing for the transaction is obtained. 17. The sellers warranties and representations shall remain accurate and true at closing. 18. Required approvals by governmental agencies are obtained. 19. The seller has performed all its affirmative and negative obligations. 20. The seller provided all required documents contemplated by the agreement at closing. 21. An assignment of lease or new lease on terms acceptable to buyer is obtained. 22. The agreement must specify the stock interest being transferred with certain warranties relating to the shares of stock, including the following: 23. There are no outstanding proxies or other assignment of voting rights. 24. The shares will represent at the time of closing a stated percentage ownership of the corporation, all classes of stock inclusive. 25. The shares are fully paid and non-assessable. 26. Any restrictions on transfer imposed by the bye-laws or otherwise have been waived, allowing for transfer. 27. The seller has and shall deliver good title to said shares free of encumbrances, pledge or other liens. 28. Warranties 29. The most important provisions in the stock agreement are the warranties relating to the legal, financial and business affairs of the corporation. The buyer will have these warranties only to rely upon if misrepresentations are discovered.
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A checklist of common warranties include:
1. The corporation is not a party to any contract nor subject to termination at will without penalty (except as may be delineated). 2. The corporation is in good standing (and in all jurisdictions if a foreign corporation). 3. The financial statements annexed to the agreement accurately and fairly represent the financial condition of the corporation as dated and there have been no material adverse changes since. 4. The corporation has good title to all the assets or properties used in connection with the business (except for those confirmed as non-owned). 5. The corporation is not a party to any litigation (except as may 6. be delineated). 7. All required tax returns have been filed and all monies due paid and there are no known audits or notices of audit pending. 8. All contracts (principal contracts to be specifically identified are in good standing and not in default or threat of termination. 9. The corporation has no bonus, profit sharing or pension plan (except as specified). 10. There are no known proceedings against the corporation by any governmental body or agency. 11. The corporation has and shall maintain insurance (as specified). 12. All leases are in good standing, without modification or amendment. 13. There are no liens or encumbrances against any asset of the corporation (except as may be delineated). 14. Agreements 15. Under a stock transfer the affirmative and negative covenants are much the same as those found in asset transactions. In essence the covenants, when dealing with stock transfers, will have to be expanded to protect the buyer from major changes in the legal and financial structures of the corporation which is to be acquired 16. Common undertakings usually provide that until the corporation is taken over it will not undertake: 17. Issuance of new shares. 18. New mortgages. 19. Charter or by-law amendments. 20. Extraordinary disposition of assets. 21. Extraordinary contracts. 22. Extraordinary purchases. 23. Distribution or redemption of shares. 24. Extraordinary improvements. 25. New compensation plans. 26. Defaults on contracts. 27. New indebtedness.
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Due diligence must be performed by the buyer on any property or business being purchased. We suggest you obtain the services of the following professionals to help you in you efforts to check out any opportunity: Always use a lawyer to check and draw up your agreements. Use an accountant to check the figures Employ or give a specialist equity to help you check the business out and help you to run it if you know little or nothing about the business you are entering.
If you have little or no funds, offer each one something that costs you nothing financially, because it is free, offer them equity. Remember in the end it is you that has to make the decision about whether to go ahead or to wash it out. Do not prevaricate top people assimilate the information quickly and form their decisions fast. Others take ages to make their decisions and often lose out because of this.
Wriggle Clauses When making offers you should always include one or more wriggle clauses, so that if you find the seller or his agent has been less than honest regarding the turnover, profits, stock, assets or anything which conflicts with the actual state of the business. The wriggle clauses you include should only allow you out of the deal. For instance such a clause may go as follows: This agreement is subject to the buyer being able to secure a loan at a suitable rate of interest. This offer is made subject to the current turnover and figures being acceptable to the purchaser. This offer is made subject to the profits being acceptable to the purchaser. Draw up a number yourself and work with your lawyer to incorporate them into your final agreement.
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Creating great wealth with partners

In order for you to get past your beginner status we suggest that you start practising immediately as a LBO practitioner and at the same time attempt to start co-opting people into your partnership. In the meantime identify potential deals so that you will have a suitable project to put before your new partners. As always we suggest that a professional should be consulted to make sure that no laws are being infringed. Many businesses also have freehold as a part of their assets. Sometimes the freehold may be worth more than the business, or the business maybe one that does not appeal, it may not be something that you want to run yourself. If the freehold is large, the partnership may consider leasing or selling off the business and receive rent from the occupying business.
As a partnership usually pools resources and therefore has more money, credibility and/or collateral it is as a result often easier to purchase far larger businesses then you would normally go for. In practice one should always ask the question would I buy it on my own? . If the proposed acquisition does not receive a yes to this question then do not proceed by participating in the proposed partnership to purchase that business. Just because you are joining others it does not mean that the acquisition will be successful, or that the partnership would be successful. If anything, because it is a partnership one should be even more circumspect.
Selling a partnership to others can be one of the most important pieces of salesmanship that you have ever undertaken. Your enthusiasm, professionalism, and presentation could mean the difference between success and failure. Previously prepared documentation such as a business plan, pictures, charts and accounts is an absolute must.
Working capital Many companies need fixed assets to manufacture products. These can include machines, factories, plus many other items which the company owns. The business also needs working capital to pay for the dayto-day running expenses, such as bills which are raised to pay for materials and services. Working capital is what the business owns which is either cash or could easily be turned into cash minus what it owes and which need paying shortly.
For instance in certain types of businesses (manufacturing ) working capital is: the value of the cash in the business as well as cash held in the
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bank; the stocks of the company, such as steel waiting to be turned into finished products waiting to be sent to customers; the debtors of the company - businesses or individuals who have received goods/services from the business but have yet to pay for them;
Minus
money owed to the bank which might need to be repaid within the next 12 months; what it owes to other businesses for goods and services and that it has received but not yet paid for (creditors); other monies owed such as to the government in tax or to shareholders in dividends.
There is a formula to calculate working capital. It is defined as the difference between current assets and current liabilities (terms which are found on the balance sheet of the business).
Working capital is the value of net current assets. This is the current assets of the business left over after the current liabilities have been taken away.
The working capital cycle Every business has a working capital cycle: cash on hand or money in the bank, purchase and received materials and components from suppliers or creditors, hired labor to manufacturer it, finished and manufactured goods in stock, goods sent out and services provided, debtors payments received, Cash at the Bank. Payments on loans, taxes and dividends to be made.
If your business is a manufacturing operation and uses raw materials and components, some are paid with cash, some are delivered on account by creditors and payment only made 30, 60 or 90 days later. To complete the work the business also hire workers and equipment. The products are sold to customers who usually get 30 days to pay for them. So customers become debtors to your business. These customers will then pay the business. The cash coming into the business has to pay for the raw materials that the have been bought. It also has to pay for the wages of its workers, its overheads, taxes, repayments on loan and dividends to shareholders. So current assets like cash, stocks, debts and liabilities such as credits and bank loan repayments are constantly going round the financial system of the business.
The need for working capital Barrington Robinson All Reserved - offlinegenie+support@gmail.com 45

To survive, businesses need working capital. Current assets left over after allowing for current liabilities, has to pay for the day to day bills of the business. ft is considered good practice in the average business for assets to be between 1 1/2 to 2 times the value of current liabilities. This allows a business to cope with any sudden crises. For instance, the bankers might suddenly decide to call in its overdraft (ask for it to be repaid). It may also happened that a major customer might go bankrupt and go out of business leaving unpaid bills owing to the business. If it has enough current assets compared to current liabilities, it will be able to carry on paying its day-to-day bills, even though working capital is reduced.
Working capital and cash flow problems Problems with shortages of working capital can be different from cash flow problems. A business, for instance, might have a large amount of working capital if its stock levels are very high and it owes little to the bank. But if it doesnt have enough cash to pay its day-to-day bills, then it faces a cash flow problem. On the other hand, a business might have a hundred million in the bank in cash today. It is cash rich today and it has no cash flow problems. But if it has to pay a bill for 200 million in a weeks time and its other current assets like stocks are worth only 50 million, then it has a working capital problem today. It doesnt have enough current assets to cover its current liabilities. As a result, it is likely to get into financial difficulties in the future.
Current ratio Another way in which a business can find out whether it has enough working capital is for it to work out its current ratio. This is the ratio of current assets to current liabilities: current ratio = current assets current liabilities The higher the ratio of current assets to current liabilities, the higher the amount of working capital in the business. The higher the ratio, therefore, the safer is the business. The part of the balance sheet which shows the working capital for this business: Working capital for XYZ manufacturers cash 35.6 debtors 75.2 stock 51.8 current assets 162.7 bank overdraft 3.9 bank loans 4.7 trade creditors 13.8
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other creditors current liabilities working capital 41.8 64.2 98.5
As at 31 st December, 1990, the current ratio for the company was a 162.7 million divided by 64.2 million, which is equal to 2.5 to 1. As already mentioned, accountants usually advise that a typical business should have a current ratio of 1.5 to ito 2:1. If it is less than this, the business runs the risk of not being able to pay its bills and going out of business. XYZ looks a very safe business with the current ratio of 2.5 to 1. However, the business doesnt want too high a current ratio because current assets earned a little or no interest and money might be better used elsewhere. The acid test ratio. Stock is part of the working capital of the business. However, it might be difficult to sell off stock quickly if this business faced a cash crisis. For instance, XYZ might find it difficult to sell quickly half its stock valued at 51.8 million for 25 million if it suddenly needed the cash. Even if it succeeded, it might have to sell it at such a low price that it didnt get anywhere near 25 million for the sale. A better measure of whether a business has enough working capital might be the Acid Test Ratio. This excludes stock from current assets in calculating the ratio of current assets to current liabilities: Acid Test Ratio Current assets-stock Current liabilities Like the current ratio, the higher the acid test ratio, the safer is the business and the less likely it is to become insolvent. At 31 st December, 1996, XYZ company current assets minus stock were 162.7 million -51.8 million~11O.9 million. The acid test ratio was 110.9 million divided by 64.2 million , which is equal to 1.7:1. This is very different from its 2.5:1 current ratio. A typical business should have an acid test ratio of between 0.5:1 and 1:1. Again, XYZ company looks a very safe business with its Acid Test Ratio above the text book norm.
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How to solve problems in businesses

I have found many problems in businesses which prevent the enterprise from making a good profit. These problems quite often can be associated with the timidity of the owner, rather than problems associated with the industry concerned. Many business owners believe that to have the lowest price will always secure work. Whilst this may be true in some instances, it also means that the business constantly works on margins. This of course can mean lower profits or no profits or even a substantial loss. I am constantly coming across businesses worth between the 600,000 and a million pounds turnover which are obviously under charging for their products. This under charging is reflected in their profits, and as a result no buyers are interested. It is clear that in many instances profits can be enhanced in these businesses merely by increasing the price of their products without too much effect on the sales. For instance a five per cent increase in the price at an art wholesalers would not affect sales too much, however, five percent on the million pound turnover would not be too adversely affected but the profits would be enhanced by a healthy 50,000 per annum. If this five per cent figure were increased to 10 per cent, maybe 10 per cent or hundred thousand in turnover would be lost, but the net profit would be enhanced by 90,000 per annum. Stock Stock is another area in that can eat into profits. Many times I have gone into businesses where the stockholding is probably sufficient to cover two years of sales. The owner is beside himself with worry because of a lack of profits, yet his stockholding is truly vast. To one of these gentlemen I suggested that he should reduce his stock so that he could benefit from more profits. Because of some opposition in the town he had also fallen into the trap of also reducing his profit margins, resulting in himself and his wife earning less than some of the staff. Staff Over staffing is also a prime cause for low profits. Before taking over a business always make sure that staff levels can be reduced in case of need. The cost of such reductions should be assessed prior to taking over business. Theft Theft can be of one of the major reasons for low profits if it is not controlled. One man I knew found it very difficult to control theft once it had started in his business, and it was the ultimate reason for his subsequent bankruptcy. Assets I have often been invited to buy a business which has more assets than it needs. The machinery available within the business was sufficient to have started at least one or more branches. The way to handle this is to either sell the excess assets or go-ahead an open a further branch with the equipment. Selling the equipment can overcome an immediate cash flow problem.
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Large debtors book. I often see that companies insist on opening accounts before they also apply what could be a cash buyer of the product. If all sales are credit sales then the business will always have to pay interest and be in the bank managers hands due to a need for an overdraft. One business that I was running only received money due for payment 30, 60 and 90 days after completion of the work. As a recession was approaching, I appealed to the representatives that from now on we would not affect their cash flow adversely, provided they helped us with ours. I also told them that the best deals from then on would have depositors of between 20 and 100 per cent of the value of the job. Much argument ensued, however, within three months this policy had reversed a 200,000.00 overdraft into a 200,000.00 cash on hand situation. So instead of paying interest we were receiving interest because we were receiving up to 90 per cent of our money in advance. A further result of this policy was that at the end of the recession, out of over 30 companies that were in the industry and in opposition to us, only three were left. Our company had become by far the largest and strongest in the area.
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Fundamentals
This section will give you some ideas that LBO practitioners may benefit from when they take over the running of a business, in which they want to cut costs to boost profits. Whilst these ideas may not apply to your particular business, the principles remain the same. The principle is look into every aspect of your business to see whether you can achieve any cost saving changes. Accountants and lawyers are absolutely essential when you are acquiring a business. The accountants can check the figures, which are usually historical and reflect the actions of the owner up to the end of the trading period shown in the figures. What the figures do not show is what can be done to improve the profitability of a business. The following are examples of actual actions the writer took over a period of time to improve one of the businesses he owned. It is for this reason that we recommend bringing in a specialist in the industry that you are choosing to get involve with especially if you have not had experience in that type of business previously.
Supplementary Information
Following are a few of the actual incidents and the results of actions I took in my own company. The savings started to take effect almost immediately in some cases once the problem had been identified, and they boosted profits to a very high level. Admittedly I have rarely chosen to follow the crowd, rather they have followed me. It is for this reason that I patented or copy righted all my work to frighten them off. If your business were enjoying a ten percent profit and you found a way of reducing your costs by ninety thousand a year, your profit would increase to possibly fifteen percent. To achieve the same percentage increase your sales would have to be increased by nine hundred thousand to make the same fifteen percent. That is why the actions you take in this section can be the most immediately rewarding if you want to boost profits without increasing your spend on advertising. For the first few years of my working life whilst I was employed by other companies in a senior management position, my total focus was always directed towards making the sales graph point upwards in as near a vertical position as I could get it. In this, with the full participation of the staff, we were successful as my branch or region always won the competitions. This was not too difficult as the people who ran the other divisions were not marketing orientated. On the other hand I slept, ate and drank sales and marketing. I read about the subject constantly and trained and worked with my staff to achieve spectacular results. Head office personnel often came into my region to talk to me about my ideas.
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It was natural therefore when I started my own business that I carried this enthusiasm for sales and marketing into my new business. I was rewarded spectacularly initially with substantial growth rates and profits, which could pay for my two hundred per cent and more annual growth. My focus on sales and marketing was such that I was guilty of neglecting the daily monitoring of the fundamentals on which the business stood. These fundamentals included all costs such as purchases, wages, salaries, rentals, maintenance, vehicle expenses plus anything else that contributed to the escalating costs in a business. At a certain point the costs associated with these fundamentals started to catch up and threatened to overtake the profits generated from sales. There was a basic reason for this and that was that our market had suffered a proliferation of opposition companies. Good, indifferent or bad, they were starting to force us to cut prices when quoting for work. After seven years of being in business I was looking through my Profit a It was within about half an hour of discovering this fact about the rivets that our very large compressor used in the factory to drive the pneumatic riveting guns and other equipment broke down. The service engineers confirmed that it would take a week to get the spares and then repair it. There was not an equivalent one to hire or buy anywhere in the City. I immediately issued the hand riveting guns, however they also broke down within a couple of hours. To think through this major problem which had suddenly developed, I left the chaos of the factory and went home for a swim in our pool. I had hardly been there for half an hour when I remembered that nearly two years before a man had given me a sales presentation at my offices concerning the use of selftapping screws.
I immediately changed, and drove down to where I remembered their factory was. They had the ideal of solution to my problem. They also had an added bonus in that each screw had a steel drill form at its end. This did away with the need for drill bits. In the normal rivet operation like we were running, the artisan has to first drill and then place the rivet in the hole. He then has to insert the rivet mandrill into the small orifice at the bottom and then pull two or three times on the pneumatic rivet guns trigger to pull up the rivet. Using the selftapping screws we were going to save many man hours plus tens of thousands of pounds on equipment. The cost of each selftapping screw was only one fiftieth the price of the imported rivets. I immediately purchased 10,000 self tapping screws and on my way back to the factory I purchased 30 portable electrical screwdrivers with back-up batteries for recharging. I had one further job to do, and that was to convince the factory staff and installation teams that this system was both faster and better than the one we had been using based on rivets. This was not going to be easy because of the profitable trade in rivets that had been established. The acceptance of the new self-tapping screw based system was of paramount importance to my business.
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The very next morning I was at the factory early and stopped all the teams loading the days work. I had an emergency meeting during which I presented the new system to them. As I had expected, no one supported me in the application of the new system. To brighten up what was clearly a hostile environment to the concept, I had previously planned to hold a competition. I asked for the fastest installation team. I offered the whole factory a deal, whereby if Michaels team, the fastest and most experienced, could beat me and my chosen team, then the rivet based system would stay, and Michael and his team would win fifty pounds between them. If the team which I would be leading won, then my three men would share fifty pounds between them, and the self tapping screws based system would be immediately applied in all operations within my business. The factory, all the teams and Michaels team willingly accepted the challenge. They expected to win, and so did all of the staff. Clearly Michaels team was highly experienced and efficient as they did the job every day. Besides being the boss and owner of the business I had always been a white collar worker. We selected all of the components required for the erection of a double carport with rainwater disposal, roof cladding and legs. The start whistle was blown. My team was finished in 10 minutes whilst the opposition team were still completing the structure before installing the roof sheeting and rainwater goods.
My secret weapon was that for every five operations they performed, I only had to do one. The self tapping screw based fixings had now been proven. Immediately I withdrew all the compressors, pneumatic riveters, manual rivet guns and drill bits from the trucks and factory. I then issued in their place electric screwdrivers and self tapping screws. The savings on rivets alone amounted to thirty one thousand five hundred a month as the self tapping screws only now cost three and a half thousand. As the installation teams were being paid by the square metre, they soon realised great income benefits from the new system as they were able to install more square metres daily. To realize all these savings and make the decision to implement it took only 24 hours. From that time on I made a habit of researching a project within my business every month to improve our product and cut costs. Ill give you some further examples in the following pages. Steelpurchasers One of our biggest purchases was steel in the form of hollow square and hollow rectangular sections. We were the biggest purchasers of this type of material in our state. In one year we had suffered three escalations in the price of the steel sections. The first was a twelve percent increase followed by another fourteen per cent and yet another fourteen per cent. Our supplier said he could not see his way clear to give us any further discount. Shortly after that discussion I was idly doodling on a piece of scrap paper whilst on a phone call to a supplier of galvanised flat sheeting. The size of the sheeting that I was buying was four metres long by one-and-a-half metres wide. As I was waiting for the final quote because I was purchasing a lot of sheeting, for something to do, on the scrap paper I divided
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the total perimeter of steel on a fifty by twenty hollow rectangle, being a total of one hundred and fifty millimetres, into one point five metres.
I found that I could get ten widths out of it. I suddenly realized that the mill that was supplying us with the hollow square and hollow rectangular sections was making an excessive profit out of my business, and was in actual fact threatening the very survival of my business, hence my previously mentioned interest in a discount. I found that the cost of the steel in this new coiled flat steel was only about five per cent of the price the mill was currently charging me. I immediately designed a new structural system, which I patented so that no one could copy me. I also went out and bought, at an auction of distressed shipments of machinery, the biggest press brake in the country at that time. The press brake cost me a low four thousand. I also had a slitter made so that I could cut the coiled steel into various widths and lengths for the different sections. Once the new system was implemented, the cost of my steel purchases dropped from a high of nearly ninety thousand a month to less than five thousand, a saving of nearly eighty five thousand per month. Painting of the structures. Every structure that we sold was finished off in a white paint. We sold this finish to all our customers. At one stage we had 24 hand painters, however due to competition we had to find another method. We finally replaced all of the hand painters with two men operating a dip tank. This method produced a superior finish at a fraction of the man hour costs, however it did not solve the on-site problems. These site problems included scratches in the paint when the structure was erected, which then had to be touched up. To do this, brushes were used by the installation teams, who in the process of touching up the scratches often dripped paint on to walls and floors of a customers house. The customer would return home and rightly refused to pay for the job until the offending drips of paint had been removed. On occasions the whole tin of paint was upset on to the floor. Often I could have as many as three to four and more complaints emanating from the paint touch up work on site. On a particular day the complaints were so bad that I decided that no more painting would be done in my factory. My normal practice has always been to take the staff with me on any such decision, however I knew that the eleven full-time salesmen we had in both the domestic and commercial fields would have opposed any such move. My decision was not without some thought and previous experimentation. To apply the paint on to the galvanized material we have to remove the coating of wax (put on the steel by the factory to protect the steel) by immersing the sections into phosphoric acid for three to four minutes. This etched the surface so that the base coat and the paint could remain attached. Often the staff would go off to tea, or luncheon and leave the sections immersed in the bath of acid. This extended period destroyed the galvanized surface. I had noticed on some structures that we had recently erected that the light passing through the white fiberglass roof sheeting was picked up by the beautifully finished mirror like surface of the galvanize steel and looked white in any event.
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The next day after my decision these structures started to leave my factory without white paint. It took over a month before I received one complaint from a client who had noticed that his structure had not been painted. The representative who sold it brought up in the sales meeting. They were all shattered when I told them that we had stopped painting structures over a month previously. Even if they had not noticed I certainly had because I had ceased to receive all those calls from upset clients, who would not pay us due to the paint drips. This action helped my company in many ways. Firstly we saved time by not having to constantly go back to site to remove unsightly drip marks. Secondly our cash flow was helped immensely because we could collect the balance owing as we didnt have many jobs that had to be serviced. Thirdly we saved nearly ten thousand a month on paint, plus the saving on wages. Fourth the constant assault on our good name for poor service disappeared. Fifth the clients received a better product and I stopped wasting my time handling phone calls about unsatisfactory paint problems. Another aspect of holding stocks of paint on the installation trucks, was theft. Once the paint had been removed from the trucks, so had the temptation to pinch the paint. Fibreglass sheeting. My wife and I had been away on one of the few holidays that we had managed to take over a 10 year period. When we returned we found that we were seventy thousand pounds short in our stock. We immediately took steps to stem the flow and erect substantial fencing around the factory. One day I was at my factory and I was watching our suppliers large fiberglass sheeting truck reverse back in through the gates, something caused me to go down and inspect the stock. I caught the two men unloading the truck as they ran towards the sheeting stocks. I insisted that they put their load down. I then counted the sheets that they had been carrying and the balance of the sheets on the truck. The total was nearly 50 streets short of the invoiced number. If they had got to the sheeting stack and dropped their load in they could have said that the 50 sheets were already in the stack. No wonder they were running to off load the sheets. It was primarily through this incident that I decided to produce my own fibre glass sheeting. I had a machine designed and engineered so that we could produce this sheeting on a continuous basis. Our savings effected on the suppliers cost to us, was approximately seventy per cent. As our fiberglass sheeting bill was equal to the cost of steel that added another fifty thousand to our bottom line. Flanges We purchased flanges, which were cut a hundred and fifty millimeters square and had four holes drilled in them, one at each corner. On the same day as the above fibreglass truck arrived and was found to be short, we had 300 flanges delivered. I saw the truck arrived from my office, and I rushed down to inspect the delivery. Only 180 flanges were found on the truck although we had been invoiced for 300.
Galvanized steel roof sheeting Just before my holiday we had secured a large contract to install over a hundred carports. They required a specially painted finish and so we ordered over four tons of sheeting to do the job. The
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sheeting arrived and was found to be nearly 50 sheets short also. The fibreglass sheeting, galvanised sheeting and flanges all arrived after the day I got back from holiday. Whilst all these events happened in another country where it was often said If it is not nailed down it will disappear, one should not become too complacent if you want to remain in business. A friend of mine, a business owner, who joined us on the same holiday, ultimately lost his business through theft. The losses he sustained caused him ten years of financial trauma. Banks and overdrafts Banks are an important part of the business community. They grease the wheels of industry by providing funds. On occasion you may find that you have a bank manager who is negative about you and your business. When I was young I once had the same fate. After a very bad incident where he bounced all my cheques, even though he knew we were keeping substantial funds in a savings account where it attracted interest at his bank. I immediately went out and found another bank, which increased our overdraft from the twenty thousand, that the previous bank manager would only give us, to two hundred and fifty thousand. This happened the very next day. So if you are having difficulties with your present bank, hawk your business around to the banks to see what sort of better deal you can negotiate.
Reducing bank charges My business now had a two hundred and fifty thousand overdraft in 1985. Interest rates were creeping up to 12 per cent and we had heard rumors of them going up to 20 per cent. In the event they went up to 240o by 1987. I recognized that if such a condition did occur the chances of the business surviving were very thin. And as previously mentioned this all came to my attention when I was looking at my profit and loss statement. I was determined to do something about it immediately. The first thing I did was to change my method of banking. Instead of banking all my cheques into my bank account, which only served to increase my bank charges, where possible we decided to put the funds directly into our creditors accounts by depositing the funds into the local branch of the suppliers bank. The balance of the funds was deposited directly into our normal account whilst the overdraft existed.
Obtaining deposits Our practice of obtaining deposits on work to be done was a bit haphazard. Some representatives collected deposits and others didnt. In a series of sales meetings extending over a period of five months we impressed on the salesmen how important it was to get deposits. We made it very clear that if they collected the deposits we would always ensure that they received a minimum monthly amount. Should they not help us in our efforts to obtain the deposits, then no help would be forthcoming. The message was clear, if you screw up our cash flow, we will screw up your cash flow. Those who participated were given their commissions in advance in proportion to the size of the deposit they obtained. Whenever a contract was brought in we never failed to expect a deposit from the
55

representative concerned. Those who didnt started to get less leads as we passed them on to those who did get deposits in. The measures may seem extreme, however, we were playing a serious game which if we lost would mean the loss of all the jobs and of course the business itself. At the end of six months we had paid off the two hundred and fifty thousand overdraft and in actual fact now had money in the account of over a hundred and ninety thousand. The total swing from 250,000 OlD to 190,000 in the Bank totalled 440,000. As the interest rate for borrowings reached an unprecedented 24 per cent, our saving was clearly in excess of 90,000 per annum. This unpopular policy saved the business and all the jobs. Opposition companies that had continued to offer repayments of 60 and 90 days on the work were all wiped out. When I brought this policy in all my representatives said that we would go out of business and the opposition would get all the business. Our representatives were well trained and understood our business as many had been with me for 13 and 14 years. We also offered a better quality product, for instance when the opposition was using a hollow square section of 75mm by 25mm, we were giving them a section of 220 millimetres by 80 millimetres. We could afford to do this because our own factory produced the sections at a 20th of the cost of the section from the mill. We had further outflanked the opposition by selling 250 franchises and agents who we supplied from our factory. These section and roofing supplies in the end were exceeding our installation revenues. Once again we had gone against the trend of giving credit when all our opposition were doing it. Reverse Logic To be successful and as an exponent of reverse logic you have to sell when everybody else is buying, and buy when everyone else is selling. On the other hand if you follow the mob like lemmings you will be lost. To be a successful L B 0 practitioner when everybody else pays a deposit, you dont even have the word down payment or deposit as a part of your vocabulary. You do not know what the word means because the only Wording you understand is OPM meaning Other Peoples Money. LBO means that you replace the need for your own cash with other peoples money, together with ideas, strategies, concepts and sources. Once you can do that youre well on the way to becoming one of the great movers and shakers of the world. Theft in a business. I have often referred to theft being a cause of business problems. Theft can wipe out any business. I have had a lot of experience with this aspect of business. I was given one particular job and told If we cant stop the theft problem in that branch we are going to have to close it down. I did solve the problems, but I was not popular with the staff, however I was effective. As I have mentioned, in my own business I strenuously crossed swords with the theft demon.
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There was an interesting report shown on BBC 1 on September 1999 at 7.3Opm under the title of The Crime Squad. Sue Lawley opened a shop in Glasgow at the St Enoch shopping centre. When they cashed up after a few days trading, they found that out of a turnover of over 800, 342 was stolen, or 4200 of the turnover. The cameras picked up people walking away with all sorts of goods. The cameras also showed people moving goods around the shop prior to moving them out. During the program, it was estimated by security experts that staff pilferage was equal to customer theft. This has been my experience. At most of the businesses with branches that I was responsible for, staff theft was greater than customer pilferage.
Conclusion
If you wish to return a business to a healthy profit the problem of theft has to be aggressively faced up to and dynamically handled.
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Prospecting for no cash down deals

Good opportunities are advertised.

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Who wants a troubled company?

If you want to try your hand at revitalizing a near bankrupt business:

Five sure fire sources of leads.

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Measure the earning power of a business

Eight factors that influence business value.

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LESSON 1 : Price is only a number

Buyer # 2 Barrington Robinson All Reserved - offlinegenie+support@gmail.com 6

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Buyer # 4 100,000 seller financing. 40,000 investment by partners. 140,000 total.

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LESSON 2 : Build from the ground up

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LESSON 3 : Ignore down payment demands

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LESSON 4 : Make your own miracles

LESSON 5 : The deal dictates the financing

LESSON 6 : Build a strong financial pyramid

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LESSON 7 : Can it really work for me?

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Two Name Paper or Guarantor

LIC (Letter of Credit)

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Visit Your Banks.

Always Use The Correct Bank

To Make Money You Must:

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Here are some good reasons to borrow money.

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Borrowers are welcomed by the best of lenders

Getting Money from Tax Haven Lenders

Getting Money from a Tax Haven:

Getting Money Off-shore:

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