Posted by CurtNY on November 17, 2000 at 08:20:53:
Merle you’ve out done yourself. I want to thank you for posting here, your posts are always full of usefull information. Thank you and keep them coming!
CurtNY
Business plan for private lenders - Posted by Merle
Posted by Merle on November 16, 2000 at 20:10:11:
What most people call a ?business plan,? I call a sales presentation. In fact, everything you do in a business setting really involves selling. When you go into the bank, the degree of service you receive greatly depends on how well you ?sell? the person with whom you make contact. To prove that, try antagonizing everyone and see what kind of service you get.
Obviously, you must use many different sales approaches as you deal with different people in different situations. And yes, the plan you present to a prospective private investor would be quite different from that you would present to a bank.
Success in any business requires finding a need, then filling it. It is interesting how often that people do not understand their own need. They think they know, but they don?t. For example, our potential private investor might think their money is safe in the bank ? CD?s, savings accounts, etc. The fail to realize that inflation and taxes often result in a negative growth situation. Their future dollars will buy less than their current dollars.
Lesson in selling ? you can?t tell them how wrong they are!!
You must, instead, show them an alternate solution ? that they can thoroughly understand. This usually requires more than one explanation to them. But, in a way that is complimentary ? not insulting. You insult them by pointing out their errors.
We created an information booklet to send to our prospects. We mailed this along with a letter of 1½ pages. The letter described our business in a vague, general way. The first pages of the booklet elaborated on the points a little more.
The tone was along the lines of ?here?s a new twist to an old way of investing your money.? All of these folks know that banks use their money by loaning it out at a profit. We simply showed them how to eliminate the bank and thus they earned their interest and the bank?s interest, too. They cut out the middleman. Basically everything else about the transaction was the same.
In other words, we simply added to something they were already doing … they loaned the money directly to us rather than their ?loaning? to the bank who then loaned to us.
In writing your information, speak in present tense. Rather than this plan being something you are ?going? to do or ?plan? to do ? write as though you were already doing it. Do not misrepresent yourself. In other words, if you are in the business ? just haven?t yet made any sales ? you are still in business.
Explain how your business works ? not how it ?will; work.
Be sure to include a page of personal information. Name, address, bank, CPA, attorney, brief history (include those facts that would indicate you have some potential for this business), personal references. A phot wouldn?t hurt anything either.
You might offer an example of a loan from them and explain how it all works. How much the property is worth, the amount you borrow, the interest rate they will receive, they monthly payment they will receive, how long they will receive the payments, etc. Notice that I said, ?the rate THEY receive, the payment THEY receive.? Always explain in terms of their benefits. Explain everything from the perspective of the investor and their benefits.
We added a Q&A section at the end. Suggests that others have asked you these questions and you are trying to answer them in advance for the reader. It may well be that you created all the questions yourself. Just make sure you don?t say they are questions from others.
We put it all together in a ?comb? binder. Not elaborate or expensive looking ? yet, business like. Those machines don?t cost much. In fact, places like Kinko?s will make the booklets for you.
Take your time in preparing your booklet. Read it and re-read it. Ask your closest friends and relatives to read it ? especially those who are not afraid to tell you how crazy they think you are. Show it to all those who tell you you should keep your job. These are the people who will show you the flaws. The ones who pat you on the back and tell you how great the booklet is won?t help you much. You are not looking for compliments.
Hope this gives you a track to start on,
Merle
This definitely came in handy Merle. - Posted by IB (NJ)
Posted by IB (NJ) on November 17, 2000 at 10:45:20:
I’ve been working on our business plan/presentation since your last post. Thanks again.