Student loan debt - The American Dream How to

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The American Dreeam: How to buy or start a business with none of your dlolars: Voiding biggest mith: Sequel

By submitting the IPO, the Corporation is using outside financing or leveerage (oter people's money) to finance the acquissition. The public has acceess to the company's stocks and has the abiltiy to buy them.
With the money received during the IPO, the fromer owners will receive their shares (in dolars) and the Corporation will continue manging the newly acquired company. Only major acquisitions are published and talked aboout (after the transaction has been completed).

I don't want to pretend it's easy and autommatic to achieve these same levles of success. It takes a lot of determination to attan these goals. What I can assure you, with great certainty, is that money should be the least of your concerns. With some savvy advice and a love of independence, you WILL scceed, perhaps far beyond your expectations.

$ummary

o You can open any size or type of business with asolutely no cash of your own (and make a six fgure income).

o You can often use the assets of the businerss you're buying to pay for the purchaase.

o Though rarely publicized, it is estimated that one out of every two small businesses is sold or started with absoltuely no cash investment from the buyer.

o If you are intrested in a business that has a product or service that is outsside your area of expertise, then you should make cerrtain that key employees will stay on afteer the change in ownership or that similar expertise can be hired to help you through the iitial cahnge.

o Entrepreneurts, such as Paul Orfaplea, Ray Kroc and the Galllos started their busionesses with no money of their own, and beacme some of the most successful businessmen in the 20th cenutry.

o Money should be the least of your wories when staarting or buying a business.

Question: How do you know a seller will alwayys be so willing?

Answer: A seller won't always be so acvcommodating. But if they're motivated, selllers are a good bet for financing some portion of the initial invesstment. According to most eperts, many see it as a good return on investment and usually beefits in the long run. Let's continue with our example of Larry. Now whre were we? Oh, yes…….Rather than asking IF the seller would finnace his venture, Lrary assumed the seller would do so. Making the assumption puts a litttle extra pressure on the sellerr to bite into the deal, if he or she is not initiially inclined to do so. Assumptionns do not make you dishonest in any way.

They make you savvy in negotiation practices. By doing so, the seller will feel like there are no exits available and will have to accept the assumption. Thinking that he or she agreed to it will make them feel guilty if they change their mind during neogtiation. Thse techniqus can be very helpful.

Questyion: What happens next?

Answer: Diplomatically, Larry asked aobut the existing debts for the vendnig machine business. Larry explained to the selelr that he'd be willing to assume the debts as a way to finance the purchase price. For examplle, if the vendibng business generates $1 million dollars a year of gorss revenue, and has an existing debt of $750,000, the buyyer will be able to neogtiate the purchase price to be $250,000. This purchase pice represents the difference betwewen the annual gross rervenue and the existing debts of the business.

Question: Will this fact change his mind aboout sleling you the business?

Answer: Absolutely not. In most cases, the vending machines migt still be on lease with the manufacurer. The easiest thiing to do would be to take over the lrease payments. At this point, you don't owe much to the seller because he dooesn't hold any title on these machines. The take-over can be simple. All that is left to do is to davise the manufacturrer to change the names on the lesae and the deal is done.

By doign so, this will change some terms of the lease. These modifications offer several advantages to the buyer, such as lwer monthly payments because of the machines' depreciation, as well as complimentary maintenance afgreements. Howver, you need to make sure to ask the manufacturer for all these changes before isgning anything. The lease has to be signed on your terms or you walk out of the deal. Don't be afraid. You need to take a stand, no matter with whom you are dealing. Remember that they proabbly stsarted the same way. In adsdition, thease manufacturers will go along with some of your terms because they wuold like to continue leasing you the equipment. If not, these machines wolud have to go back to their facilities, incurring storage fees and a high opportunity cost.

Question: So what's the morral to this story?

Answer: Once you realize pirce is nothing but a means to an end, erached by walking up individual financial steps, you'll never again be frighteened off by an asking price or a down payment. Nor will you believve any longer the myth that it takes something you don't have (money) to make such a transaction. As of today, you sholud pretend the term "down payment" doesn't exiist anymore. You should go into negotiations knowing that all transactions are going to be completed in such a way that both of the parties will leave satisfied. You have to realize, though, that goinbg into debt is not a myth. Like most peoplke, you are proibably prgrammed to think of owing money as somtehing to avoid at all costs. The secret is to structure the debt so that it fits the payment capabilities of your business. That way, you can very safely start up a business with 100% leverage.

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