One of the hardest things to do whilst on an adventure such as this, is maintaining discipline over the finances. You always tend to 'see' deals that are just out of reach of the current financial position. We have on several occasions!
We have overcome this 'frustration' by lining up some 'strategic financial partners', people who know what we are doing and want to make a bit of extra cash themselves (but not do the work!).
Heres how it works: At this point in time our cash balance is £40. Say we get offered a stock deal at a cost of £1,000 and we are reasonably comfortable in expecting to make, say £500 profit on the deal. Well at this point in time the deal is a no no. We have to let the window of opportunity slip through our fingers until we have built up our cash position. However if we have lined up a benefactor in advance we can propose the deal to them, give them the full rundown of the deal (costs, proposed sales, possible snags etc) and give them the opportunity to 'fund' the deal. We buy the stock, we make sales to repay the benefactor their investment (ALWAYS pay the benefactor first - you need to keep them happy for the next time you may need cash) then we sell off the remaining stock and calculate the profit.
The key to this is keeping the benefactor happy. So you give them 50% of the profit. Thats a big chunk you may say, but they have allowed you to do a deal that you wouldn't have been able to do otherwise, so look on it as a bonus!
We are currently working on a couple of deals using this method and details will be posted soon. This will help us boost our cash balance and should put us well ahead of our target.
Don't worry if you don't have access to friendly benefactors, just keep a tight rein on the finances and don't overstretch yourselves and you will get there as planned.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment