Jeff Reibman, an outstanding sales manager, wanted to start a vacation club membership company. In doing the research, he discovered that he could do it, if he cut corners, for about $10,000. Unfortunately, he didn't have $10,000. What he did have, however, was a contact manager with people that he had made rich. He contacted one of these, pitched the idea, with a marketing concept that was unique, and got an offer of not just $10,000, but $15,000 to start the company.
What did he do?
1) He established a business plan, on the back of an Alehouse napkin.
2) He established a marketing approach that was viable.
3) He had done the research to discover the costs, and he had all of the information that he needed to know what the ROI and profit would be, based upon certain assumptions.
4) He made contact with people that he had already made rich, and shared the plan with them.
It was step #4 that was his "capital". He had already established a trust with these people, and they knew that they could depend upon him in the future, because he had already made money for them in the past.
My family had an RV park. It was filled during the winter time, but the summer months were slow. The only way that we could survive was to expand to enough sites so that our winter business would hold us over through the summer. We created the plans, established the costs, got the permits, and were ready to move forward except for one small thing. We didn't have the money.
What did we do? We went conventional and had three banks come out to the headquarters and give us bids. After we had selected a bank and gotten the money, my dad said, "I wonder if we could do that in a different way?"
We had retirees that stayed with us all year, paying 6 months of full rent, and when they were gone, six months of on site storage. We sent out a letter asking them if they would like to get a return on their money of 8% (bank rates were also 8%) by paying their full year rental up front, and we would give them a discount. We had so many campers send us their full year rent, that we were able to pay off the bank loan in two months, and we used that alternative financing technique for each expansion after that.
What untapped capital do you have? Do you have receivables? Do you have goodwill that you have established over time? Do you have skill sets that are valuable? Do you have a marketing idea? What assets do you have that you can covert to capital?
What if you have NO cash, NO skill sets, and NO goodwill established over several years? Can you be a broker?
Let's say that you want to be a print broker. You go to a print shop that does good work and negotiate to get discounts for work that you bring in. Then you start calling and knocking on doors. If you go out and hustle, you can find businesses that need work done, and if you can close the sale, you can write it up, take it to the printer, have the work done, and get paid by the customer. Your profit is the difference between what the printer charges, and what the customer paid. (Negotiating is critical in this process.)
The margins might be slim at the start, but as you start doing more volume, and establish a "book of business" your profits will rise.
What other businesses can you broker?
Don't let capital stop you from being a capitalist. Use your imagination and hard work to create your own capital.
