Learn How to Write a Busiess Plan

Writing a business plan can be a daunting task the first time you do it. So many would be great entrepreneurs have a great idea and need funding for it, some even self fund or boot strap their business and they all have big plans. They will tell you how big their company will be some day or why you should invest your money but most do not have a formal business plan.

Just this last week I was presented with a new idea that I really thought was excellent and the entrepreneur was clearly working hard and committed to getting the product to market. She was excited, smart and full of enthusiasm and of course wanted me to invest in her idea.

Now here is the reality the venture could be huge or a huge flop and that risk is always present so the risk is not why I turned her down. Nope it was the lack of a business plan that did it. She even had great packaging and was lined up to do trade shows and meet some perspective buyers from major retail chains. The risk is still there so I must make a risk assessment as an investor.

How I make a risk assessment

This is pretty simple I know the results if the product totally flops that is a 100% loss right? Yet what a business plan will tell me is what I can expect to see in gross sales and return of investment at various levels of success. How can an entrepreneur expect investment if they can’t even tell me the return I will get and in how long if things go right, mostly right or moderately successful. I need the numbers for all those out comes to weigh the risk reward, without that I can’t even get started.

I also may not understand the market, the supply chain, the competition and the total market cap and opportunity in a new niche.   I need it spelled out and I need to understand the marketing that the company will use to communicate its message to the world. Additionally if I am to put my money or even just partner with assistance/consulting with a company need to know their vision.  More importantly I need to know they understand their own vision. All of these things are addressed with a proper business plan. Even if you don’t want investors you need a business plan to be sure you have your own vision right, your own risk/reward ratio strait and to help you make the right decisions.

How do you do it? Easy turn to one of my heroes in business, Donald Trump for some free assistance. Trump University offers a free How to Write a Business Plan course you can sign up for and lean a ton from. I also recommend the excellent free business templates available from Score. They have templates for business plans, financial work sheets and other needs.

More news about gold

I have blogged a lot on gold, silver and other metals thus far because I firmly believe that they represent a great hedge against inflation, a good long term investment and because I feel they offer a lot of protection from the coming recession. So when this article from Forbes hit my RSS Reader this morning I was quick to have a look at it. The article is title, Gold’s Allure Growing, and I recommend you give it at least a quick read.

While I found the article interesting and quite accurate I do feel they sort of glossed over a key reason for gold going up recently and a reason that gold will continue to go up for quite a while. Here was the only mention of this factor in the article,

“Demand for the metal is also strong in Asia, for jewelery and as a store of value.”

That was the only mention of this factor in the entire article and I find this very much missing the boat. Why? Well, because with China and India what we have is more then 2 Billion (with a big B) people who are rapidly growing their middle class and both societies have a tremendous appetite for gold jewelry. I recently read a report on of the foremost expert on gold and mining operations who stated that we currently have “at least a 10% shortfall on the production vs. demand for gold most of which is attributed to the rising demand in India and China for gold jewelry.”

In other words those 2 billion people are buying gold faster then it can be extracted from the ground. The big issue with that is it has never happened before. The demand for gold has always been based on how rare it is and that has always created a demand yet until now anyone could always buy as much as they could afford. Today we have unmeetable demand and the demand is growing faster then the production and again this is the first time in modern history that such a condition has existed in the gold market.

I highly advise any investor (small or large) to have a serious heart to heart conversation with your financial advisers about putting at least 10-20% of your holdings into gold, gold funds, etc. The increased demand and declining dollar together make gold a real winning opportunity at least in my opinion right now.

Another prime rate cut is comming

Well if you did not start a refinancing process when I suggested it before you may want to hold a few more days for a bit lower of a rate. Everyone is expecting yet another slashing of the prime rate after the Fed’s meeting at the end of this month. I don’t predict another big cut and while the media is using the term “slash” I think we will see perhaps another 1/8th - 1/4th. That won’t mean a ton more then the last cut already meant but it will make a difference to some who are on the “edge” of making mortgage refinancing a good decision.

To me the real opportunity here is for real estate investing. Loans are lower then any time in history and houses are sitting by the butt load. Right now is a great time to find an incredible deal on investment property. It is however not a time to be stupid and go into highly leveraged deals. What you are looking for right now is a property at 10-20% under even the current depressed value, a property that you can afford to have for a year to 18 months with out a tenant and still have no financial grief.

This is a big part of why the rich always get richer. If you are in good shape money wise right now and can afford 1-3 small properties in this fashion you stand to make very big investing returns in the next 5 years. If however, you are dead broke or swimming in debt you just have to sit back and watch all these great deals sit. This is a very bad time to be in the property flipping business. With the massive inventory out there, suppressed market and probably a 2 year recession ahead it is a great time to be buying the best deals you can find and afford, holding on to them and renting them as you can.

This is exactly why I always say the reason to build wealth in many ways is to live good in bad times.

If you are great financial mind listen up

I was recently asked to have a look at a website for a company called, Willis Consulting Inc, they specialize in financial job placement and while the news reporters keep talking about gloom and doom now may be one of the best opportunities for top financial minds from an employment view point.    You see when money is tight, when profits are down and when recessions hit hard it is the financial expert that turns a company around or keeps it from entering decline in the first place.

Even during the worst economic times there are companies that thrive and excel.   In such times even while laying off parts of their workforce many companies still pay top dollar for bright financial minds because when the chips are down they are needed more then ever.

If I were ever to consider myself “employable” again I would certainly utilize an executive recruiting firm.    If you are really good at what you do emailing resumes and searching job boards is a total waste of time.    My career advice for anyone looking for new opportunities is find a good recruiter, someone you trust and who can do a good job and put them to work marketing you.    If you happen to be a top financial minds this may be one of the best times in recent history to do just that.

Another financial advice website to check out

I was just asked to review a web site called Finance Genius. I have to tell you I like what I saw. Basically the site is an information portal that helps consumers with a combination of advice and what amounts to a brokerage approach in connecting consumer to different options for things like insurance, mortgages, student loans and Auto Warranty services.  With automotive warranties in particular I always advise people to shop outside sources, the extended warranties offered by dealerships tend to be over priced and then simply lumped into your loan so you get to pay interest on it.  My additional advice is wait until your included warranty is almost up before paying for an extended on.  Why pay for a warranty you may not use?

Like any site that is recommending various financial products my advice is to shop what they have and compare it to other options.  Always make sure you find the best deal you can but Financial Genius certainly looks like one of the good guys so if you are in the market for any of their services have a look around their site and see what they have to offer.   Remember my view is debt is bad but when it is necessary get the best deal, with the best terms you can find.  Sites like this one are good tools for finding those types of deals.

Now is the time to refinance your mortgage

Let me be clear that I think the continued suppression of interest rates by The Fed is a mistake.    All I believe is going to happen is more delay to the recession/depression we have to go through and right now delay simply means when it fully hits it will be worse due to the delay.

That doesn’t mean you can’t be smart and benefit from this.  If your interest rate is more then 3/4s of a point then current rates odds are in about a week or so you will get the chance to shave a point or more off it.  The Fed seems committed to yet another cut either in the next few days or at the end of the money the next time they meet.   I have the following advice for people in different categories.

1.  If your rate is above 6 percent odds are you can cut your payment a significant amount with a refinance in the next few weeks.  If you have the credit to qualify and if it saves you money, do it.

2.  If you have decent equity in your home 30-60K or more and if you owe 10-20k in consumer debt and if your rate is at, near or above 6 percent you may have the opportunity to refinance, pay off your debt and pay LESS or very little more each month on your house payment.  If so and if you are willing to cut up the credit cards you pay off, do it and do it now.

3.  If you were a dumb ass and got into a sub prime or adjustable loan see what you can do to get a conventional 30 year FIXED rate loan now.  There probably will not be a better time for a while.  As soon as even a hint of rebound in home sales come these rates will not be held so low any longer.

I am not a massive fan of cash out refinance for paying off other debts.  Many times this is something that gets abused.  If you plan to take this approach again it is necessary to make sure you get rid of that credit card that got you in the hole in the first place.  Yet there is no question that debt on housing is better then debt on credit cards.  I honestly believe for the home owner with equity, good credit and some unsecured debt this may be the best opportunity in a long time to consolidate bad debt into not so bad debt.  If you do it, look at it like a “stay of execution” and commit yourself to a renewed quest toward financial freedom.

More about silver

With all the talk of a coming recession I am sitting down with my financial adviser this week and I am moving more of my money out of U.S. stocks and for that matter U.S. dollars. I am buying more gold, more silver and more foreign government bonds. Please understand that I tend to hold gold and silver more in “funds” then in hard metals. Though I do think there is a place to actually hold some bullion as well.

As I have been researching silver I came across an investors web site that specializes in metals called Monex Precious Metals, and they have a great page about silver. I encourage you to watch their video about silver as you will learn some pretty interesting silver facts.

One suggestion is that the video does not stream well. I advise you to click play, let it run a second, then click pause and let it pre load while you do something else. Come back to it in a few minutes and then watch it. Someone should get with Monex’s marketing department about using YouTube for their videos. I am 100% sure that bad steaming is costing them viewers.

How bad is it for our economy

I am not a gloom and doom type but I do believe in being prepared and I also don’t believe in just letting your money sit and wait in mutual funds and stocks when a clear bad time is on the way.   If I were you and I had my money in conventional US Stocks I would get out and do it now.

How bad is it really? I invite you to listen to this interview on the Glenn Beck show with Comptroller General David Walker. This should scare the hell out of you. You will learn how bad the pending social security nightmare really is.   Honestly we are “bankrupt” as a nation.

If you add this to the mortgage problems and our other weaknesses we are in real trouble.

So where would I put my money or more accurately where is my money going?

• First I am putting a good chunk into 2 year Australian Bonds at a guaranteed rate of 7.5% plus any gains as the dollar further weakens.
• Second Gold is a good hedge that has done very well, I will buy more and my only regret is that I did not buy more in the past.
• Third hold cash and possibly in the form or foreign currency such as in a United Kingdom or Canadian bank perhaps even buy bonds in some other forigne markets. Right not as I mentioned above Australia, New Zealand, Canada and the UK are all in great shape financially.

I don’t want to sound un American here at all but the simple fact is we are in over our heads for more then 58 trillion dollars and we have zero.   Again listen to the interview with David Walker, this man has no political axe to grind and he is the chief accountant for the United States government.   His message is simple, we are out of money.

So my advice is protect your hard earned dollars by converting them into something other then dollars.  Perhaps not all of them but pick a percentage and diversify before this bad problem gets a lot worse.