I could make my first million if only……..

August 2, 2008, 1:57 am
Filed under: Business Planning, Financing | Tags: borrowing, building projects, Business Planning, capital, funding, millionaire, money, venture

This week a client told me he could make his first million dollars if he could just come up with the $33,000 to cover his 20% down payment for the land…………………. He is a builder and it was a 9 building project to take place over 3 years.

Isn’t that the way it always is? We dream and plan for the big deal that is going to launch us into financial freedom. But it always requires us to invest our own capital, which most of us have a hard time coming up with. So do you borrow the down payment too, and head into the project quickly, with a large debt load? Or do you wait until you have the capital to fund the initial launch? That is the eternal question………after all, if you miss this opportunity, you might never see another one. And if you move on it before you should, then you spend years struggling with the debt service. Certainly with the current credit climate, banks and lenders are not as quick to fund ventures without sufficient capital, even apparent lucrative real estate deals. So do your homework before you ask for a loan.

Some suggestions for success in funding your project:

SAVE money! Alot of it. One thing I have discovered in the last 20 years is that the clients I work with that are “wealthy” later in life, are the ones that saved regularly throughout their whole life. They didn’t just wake up one day at age 58 and say “now I can retire with my million”. Starting early in life, they saved a little out of every paycheck and tucked it away without ever touching it. They didn’t even buy houses and cars until they could afford “most” of it with cash. And they never overused or abused credit cards. It’s never too late to start saving – so if you’re “savings challenged” – get started now. A good rule of thumb, save 10% of your income, give 10% away (givers gain in life) and live on the other 80%. Do this for a lifetime – say 20 to 30 working years, and you’ll be rich – no matter what your income level. I’ll be happy to run the numbers for you and prove it if you want to shoot me your details SO SAVE!

Do a Cash Flow Analysis of your project before you ask for a loan. By putting forth the time and effort to project the cash flow, your banker will be impressed and you will affirm the likelihood of success. In simple terms, make a spreadsheet with cash inflows at the top and cash outflows at the bottom to determine positive or negative net cash flow for each month of the project. For more details on Cash Flow Management and charting cash flow for your banker, take a look at my online seminars at www.AfterBusinessPlanning.com There’s a good 1-2 hour Cash FLow workshop there.

Don’t over borrow. Funding loan payments within your budget is one thing – but you’ll never know the stress of over borrowing until you do it.

Just another story from the ‘ville……………