Street Speculator

This post takes a step away from presidential politics and the nation’s economy.

If you are stressed about your financial future, living paycheck to paycheck, or tired of getting useless sales advice about ways to improve your financial situation, then do one thing, START A BUSINESS or a CAUSE.

Where do I start: Whatever you love to do, what you would do for free, that’s a start. What are your hobbies? What occupies at least 75% of your time daily? This area of your life should be where you focus your time in creating a small enterprise. Change your hobby into either a (1) product or (2) service. Also, and most important, focus on getting your product or service in front of the eyes of the world, not just your family, neighborhood, region, or even the U.S. consumer. If you want to survive, you need to develop a global mentality, a global purpose.

Market: Learn how to sell. As Jeffrey Gitomer states, “People Hate to be Sold, but they love to Buy.” Good salesmen never go broke. Think about products you immediately associate with people: iPod, iMac, iPhone (Steve Jobs), Windows, Office Products, xBox (Bill Gates), Dallas Cowboys (Jerry Jones), Dell Computer (Michael Dell), partisan politics (Rush Limbaugh), Harry Potter (J.K. Rowling), Facebook (Mark Zuckerberg). These people are all good sellers + they provide a product or service many enjoy.

MONEY, START-UP CAPITAL, etc.. (The Most Important Aspect), now there is money out there ready to be invested in new innovations. First, seek out family members. Next, the bank whom you have had an account with or relationship for a long period of time. If that does not work, look for Angel Investors or Venture Capital firms.

If you are not familiar with these organizations then Google both terms and you will more than likely get results that forward you to the trade organizations that will provide the thousands of names of these groups, including government entities. Angel Investors and Venture Capitalists (commonly termed VC’s) put up the start-up capital in exchange for a % of the company. The % of ownership will be negotiated before the 1st check is cut. Don’t feel uncomfortable in giving up equity. The companies who funded Microsoft (Symbol:MSFT), APPLE (Symbol: AAPL), Amazon.com( Symbol: AMZN), DELL (Symbol: DELL), ORACLE (Symbol:ORCL) & Google (Symbol: GOOG) in their start-up stages all made a fortune.

However, the key to receiving money from these organizations all begins with your presentation. Remember, what would somebody have to say to convince you to lend them $80,000 + to start a company with “NO” initial revenue and a speculative revenue model. The video below is an excellent tool, providing great strategies in preparing you to pitch your business idea to potential investors.

Last, hire good professional services: Lawyers and Accountants. No need of developing the “Next Great Thing” if while during the middle of development you find that another entity already had the same idea patented. LAWSUITS WILL THEN FOLLOW!!!!

Most of our discussion is about equity market investing. Investing in these markets is valuable and often very lucrative for many. There are however many squeamish and fickle minded individuals who would not put a dime of their money into speculative investment unless they can see INSTANT DOLLAR SIGNS $$.

To those of you with this mentality, the SPECULATORS offer an alternate investment vehicle for you today. Become a Limited Partner (LP) in some start-up or existing business venture.

A Limited Partner (LP) is an investor in a business venture (Usually in a Limited Partnership, but not always) who has no voice in the management of the company and having limited personal liability for the organizations debts while sharing in the profits.

Limited Partners are very popular in today’s business environment. Participating as a Limited Partner is another way to generate a monthly revenue source for the investor.

Where do you begin?

First, you do need cash up front (Small investors sources: 401K, savings, home equity, etc….). Find some business which you are familiar with including the particular business environment it is included in. We are not talking about searching for THE NEXT BIG THING. It can be something simple, for starters, such as a local franchise, a child-care operation, entertainment venture, professional services company, etc… We suggest you look at an operation where you have an existing relationship with the current owner and/or investors.

Next, with the help of a lawyer and an accountant, research the financials of the company (Last 4-5 years of tax returns, salaries of present management, liabilities, expenses, future marketing plans). This is where a company’s net worth is determined.

If you are certain of this company as an investment, make a proposal to the owner(s). Your interest (as a Limited Partner) is determined by the dollar amount invested against the value of the company.

Ex. Company A is worth $100,000. Limited Partner A invests a total of $20,000. This makes Limited Partner A’s interest in Company A at 20%. The Limited Partner would be entitled to 20% of the profits and 20% of any liabilities. If the monthly profit (money left after expenses are paid) is $15,000, the Limited Partner would receive $3,000.

Start small initially. My first LP investment was in a siblings child care business. I invested $5,000 and received a monthly payments of $200.

A Limited Partner (LP) investment is more stable than in an erratic stock market. Consider becoming a Limited Partner as an alternative investment, but continue trading in stocks as well. Below are some examples of Limited Partners who profited well off of their investments.

BET (Black Entertainment Television): Owned and founded by Bob Johnson.  John Malone (former Chairman of TCI Cable) also had a percentage ownership as one of BET’s initial investors. BET was sold to Viacom for $3billion, John Malone’s take was estimated to be around $650 million.

Facebook: Owned by Mark Zuckerberg. Company received a $240 million dollar investment from Microsoft, giving Microsoft a 1.6% stake in Facebook and valuing Facebook at $15 billion. Therefore, if/when Facebook is sold for any amount over $15 billion, Microsoft receives 1.6% of the sales price.

Before investing as a Limited Partner do your homework. We cannot stress this more. Make sure everyone understands that 2+2=4 and that the owners are not taking extraordinary salaries while leaving little for company growth and future investments.

‘Ol Rushbo, as he calls himself, is definitely a force to be reckoned with on talk radio. I do not agree with many of his political views, but nonetheless recognize his achievements.

Today, Limbaugh was given a very lucrative extension on his talk radio contract. The new deal is believed to be worth $400 million dollars, or $38 million/year with a $100 million signing bonus.

CONGRATS. Capitalism at its finest.

Bravo! What a run, arguably the most successful and influential entrepreneur of the century.

If you were unaware, today was to be Bill Gates final day at Microsoft. His next step is to work full time at his foundation (The Bill and Melinda Gated Foundation).

However, I do not believe we have seen the last of Mr. Gates at Microsoft. Don’t quote me, but somehow even as he does the marvelous works with the foundation (Ex. Providing immunization shots and treatments to children living in 3rd world nations) the desire to outmaneuver and out-innovate Google, Sony, and Apple will never leave him.

Bill will return within the next two years! If not, well the SPECULATORS, would like to thank you for your contributions.