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Seeds For Thought
Computerizing Your Business
Today, it would be difficult to think of any business that would not benefit from computerization. And this trend toward computerization can only be expected to increase over your coming entrepreneurial career.You should immediately put into your business plan, a commitment to learn how to work with computers and become familiar with the power of the Internet. If you are still in school, you should take one year and preferably two years of typing so that your fingers will fly over the keyboard as you work. If you are out of school, purchase an inexpensive typing tutoring program and practice, practice, practice. Typing is a valuable skill, which will prove to have a high communications dividend payback. Learn to type and use your computer. Remember, you want to learn how to work with computers. You do not need to learn to any extraordinary extent how computers work. It is no more important to know how a computer works than to know how your TV or microwave works. You want to know what work your computer can perform on your behalf and not particularly how it accomplishes the result. A computer system will consist of a central processing unit (CPU), a monitor, a printer and software. You may also want your CPU to contain a modem, which will enable you to connect with large databases, send/receive e-mail and faxes, etc. Since research is essential to the success of any business, to receive the full benefit of the web, you must have high speed Internet access. If you can order cable access or DSL access, get it. In the excitement of equipping a new business, you must guard against overextending your budget. It might be very nice but very unnecessary to have the newest brand name state-of-the-art equipment. In many cases, the prudent course would be to start your business with perfectly serviceable generic models and brands. Obviously, as your business and income grow, you can update and enhance at will. You must rely on your research to tell you where you can save and where you should splurge. For most businesses, industry specific (vertical) software is available. Your research will tell you how important vertical software is to your industry. If you're a travel agent, a powerful computer system and vertical software are mandatory, since up to the minute information is your business. However, if you're a florist, it might be just a nice luxury to have software that was developed specifically for florists. You don't want to spend $500 for a vertical software program if you can do the same tasks with a more flexible non-industry specific software program that costs under a hundred dollars. Research. Ask. Most businesses can be simply managed and controlled with off-the-shelf, user friendly, inexpensive software programs such as Quicken. You can track your inventory. You can handle your scheduling. You can do all your bookkeeping. You can project yourself to richness. If you devote an hour a day to your new programs, in most cases, you can expect to be sailing through tasks like a pro in two to three weeks. Today, most programs come with good instructions and/or tutorial programs. As an alternative, both computer superstores and public adult education classes offer inexpensive how-to classes for the most popular software programs. Most small businesses are people centered businesses and a computer and e-mail are an excellent tool for reaching people. Since you will be able to type, a one to four page monthly newsletter should be a solid income booster. The newsletter does not have to be fancy but rather informative and fun to read. The newsletter should cover your monthly specials and offer a strong inducement to utilize your services for that month. If you use a discount printer and bulk mail, the cost of a monthly newsletter is well within the range of most businesses. If you have a website, your newsletter can be done electronically. You will find that sending a monthly newsletter, print or electronic, will have a cumulative effect, which grows by the month. For the first few months, you may receive scattered feedback. After six months, people will be commenting on receiving your mail. After a year, people will be swearing that every time they turn around they find your newsletter. This gives you a good opportunity to tell your customer that he or she is special and that not everyone is on the mailing list. A monthly newsletter can be a time effective and inexpensive way to boost your image and income while separating you from your competition. Maybe, every other upholstery cleaning company in town will take the citizens of Newton for granted but Jose's Upholstery Cleaning will not. Jose is going to tell you every month about how well business is going. You'll know which specials he can offer you, and what promotions he has successfully completed in the last month. He'll tell you which promotions are planned for the coming month. And, each month Jose may pat himself on the back and include a few testimonials from satisfied customers with their permission. "Jose, you're a magician..." "Jose, thank you for..." "Jose, I would not hesitate to recommend..." Yes, you're a promoter and it's all right to blow your own horn. So, think of ways to add names to your computerized mailing list and you'll be adding revenue to your bottom line. Desktop publishing and managing a mailing list are such a snap these days that among the 250 people that you know, there is sure to be someone ready, willing and able help you get on-line. Collect all the e-mail addresses that you can from customers and prospects and then get their permission to send them your newsletters, promotions, announcements, etc. Get permission. Never spam. Your Website* Study the websites of your local competition. * Study the websites of your industry leaders. * What income producing online products or services can you offer? * Who can design, maintain and update your site? * What online affiliate relationships can you establish? * What online referral relationships can you establish? * How can you establish a sense of community on your site to encourage visitors to return and to do business with you? Andy Martin, InvestorAndy asked Mr. Taylor what was up with Don. Mr. Taylor's answer was again to impact on Andy's back-on-track real estate career. Mr. Taylor's news wasn't that good. Mr. Taylor hesitated a moment and then decided that Andy had matured enough to show empathy to someone else's situation, "Andy, I don't know how much you know about Don's personal situation. Don isn't one to bring his troubles to the office. But, let me tell you this much. Don has three children: two grown sons who are out of the house and an eighteen-year-old daughter, Susan. Susan is severely handicapped. When she was four, she was hit by a car and suffered head and back injuries. She is very lucky to be alive. "Anyway, Susan can't use her arms or legs, is confined to a wheelchair and, let's also say, that her mental capabilities were severely impaired by the accident. Years ago, the doctors recommended that Susan be institutionalized but Don and Jane, his wife, wouldn't hear of it. They've been taking care of Susan at home for all these years. Now Jane is very sick and Don has been at home taking care of both of them. That's it." Andy felt physically weakened by the news. He was young and he didn't want to hear about these stories when he actually knew the people, "Gee, this is terrible. I knew Don had a handicapped daughter at home but I really had no idea things were this serious. Is there anything that I can do?" Mr. Taylor felt proud of Andy for asking, "Well, Andy, we both know Don and Don isn't about to ask for our help but we can both do something, if you like. Don has four deals on the table now. I suggest that you and I tell Don not to worry and that we're going to follow through on these deals for him." Andy was sincerely interested in helping. "Certainly, Mr. Taylor, we can do that. I'll keep the clients that he has on ISP happy also. And, if any of his clients have new business to do, Don can count on me to handle that also." Mr. Taylor, remembering the old Andy for a minute, commented, "Now, Andy, don't be volunteering for any of this work if you expect a commission split. These deals are Don's, and I know that Don needs the money." Being a salesman, Andy wasn't insulted easily, "Mr. Taylor, I assure you that my scheming days are behind me. I owe Don. I owe Don a lot. I'm glad I can do something for him." Mr. Taylor stood up and patted Andy's shoulder, "Well, Andy, that's what I'd hoped you'd say." Mr. Taylor and Andy did help Don a lot. Two of Don's deals went according to plan but one got very complicated and time consuming and another fell through and was revived twice. But, for the eight weeks it took for Don's personal situation to stabilize, he was able to stay at home and relay instructions to Andy at the office. Upon his return to office work, Don seemed genuinely grateful to Mr. Taylor and Andy. "I can't thank you guys enough for your help" Don said. "Jane is much better. We've decided that, for now anyway, Susan really needs nursing home care and I'm satisfied that we've found a good full time care facility for her. It's in Edgeton so it's close enough for her mother to visit everyday. I hated doing this but, hey, thanks again." "It's all right, Don." "Don't mention it, Don." Don changed the tough subject, "Andy, while I was away, I had some time to think and I might have some ideas for you and me. We can work on them together if you'd be interested?" Andy was all ears. "Yes, Don I would be interested. Just tell me when, Don." Don seemed interested in getting right back to business with full steam ahead, "What about tonight? We'll meet after work and have dinner? Jane will be out working tonight on fund raising for the Head and Spinal Cord Injury Association. You're the playboy. Where do you suggest we go?" Andy may have changed but he was still going to be easy prey for some ribbing. "Was the playboy, Don. Was. Hey, as far as I'm concerned we can order a pizza from Romano's and have our meeting right here." Don was surprised. Maybe, the pretensions of Andy really were going to be a thing of the past, "Andy, you, pizza from a box? I guess you are changing." Andy laughed. "Please, Don, I'm trying. Don't rub it in." Over pizza, Don lays out the tentative outline of his plan with Andy. "Andy, your idea of doing the Annual Portfolio Review for investors as a spin-off to the newsletters may be about to pay off big. Let me fill you in. Last week, I did a Portfolio Review for Mark Stevens, one of my developers. I introduced you to Joe at one of the Roundtable meetings. Anyway, in talking to Joe, he mentioned that he might be willing to sell the Riverdale Shopping Center." Riverdale was a beautiful center, which many investors would covet. Andy narrowed his eyes in concentration and nodded approval. "Gee, that would be a great listing, Don. Have you got a buyer in mind?" Don looked right into Andy's eyes and firmly said, "Yes, I have. I think that you should buy it, Andy." Andy really thought that Don was joking. This type of investment was for millionaires or corporate clients, "Me? You're kidding, I haven't got that kind of money, Don. How much is Stevens looking for? Whatever it is, it's out of my league." 
Andy liked the numbers but these were numbers for other people's deals, not his. "$2.8 million. You flatter me, Don, but where am I going to get that kind of money? I've never done a deal of this size before." Don had a good strategic plan in mind, "Well, Andy, I wouldn't be wasting my time or yours if I didn't think that this was a good deal and that you could handle it. Andy, in every investor's life there will be times when he or she is faced with challenging opportunities. Do you stick with the small safe investments, the status quo, or do you accept the challenge, the risks and rewards, of moving ahead?" Andy interrupted, "$2.8 million is some challenging leap from what I've been doing, Don." Don tried to continue, "It is, but think. What is the difference between buying a three-family house for $280,000 or a shopping center for $2.8 million. It's..." Andy answered for him, "It's $2,560,000, Don." Don stated a philosophical concept known and used by many wealthy investors. "Andy, what it is, is being able to move the decimal point in your mind. That's what it is. Move the decimal point in your mind from $280,000 to $2.8 million. You can make a good or a bad investment at $280,000. You can make a good or a bad investment at $2.8 million. The mechanics of the deal are basically the same. Working the numbers is the same. Getting the financing is the same. Managing the property is the same. The difference is the decimal point in the price and in the profits. Are you ready to do it?" Andy still figured that what he wanted and what he could afford were far apart. "How, Don? How? Yes, I'd love to be involved in a deal like this but how could I ever do it? Maybe in a couple of years but..." Now, it was Don's turn to interrupt Andy. "Andy, I repeat, are you ready to do it? The opportunity is here now. With the right management, with the right tenant mix, with the rents raised to market level, the Riverdale Center can be worth $3.5 million inside of two years. Somebody is going to buy Riverdale. Are you ready to be that somebody, Andy?" Andy was ready to bow to the advice of Don. "Yes, all right, I'm ready, Don. Now, just tell me how." Don outlined the strategy, "A limited partnership syndication with you as both a limited partner and also the general partner. In a limited partnership syndication, usually the limited partners provide the downpayment capital and the general partner contributes the organizational expertise. The cash flow, amortization and eventually sale proceeds are split in an agreed manner between the limited and general partners. "I propose," Don said continuing, "that you raise $800,000 through an offering of 40 shares at $20,000 each which would give you $600,000 as your downpayment and $200,000 to cover transaction costs and for a modest initial operating fund. I would go for a $2 million mortgage and a $200,000 construction loan to upgrade the center. The center could use a new facade and new signage and re-lining the parking lot. It needs some landscaping, etc." Andy wanted to know, "Can you and I find these limited partners?" Don didn't seem to feel that selling the partnership interests would be that big a deal. "Andy, that will be the easy part. Remember, this is an excellent deal we're talking about. How many investors do you know who want to invest in real estate but are afraid of the management and liability?" "Plenty." "That's right, Andy. We both have an index box full of them. Well, here's an opportunity for them. In a limited partnership syndication, you, as the general partner, supply the management and the limited partners' liability is limited to their cash investment - a good deal for everybody. Listen, all the big stock brokerage firms, Paine Webber, EF Button, Merrill Lynch, all of them, have been doing real estate limited partnership syndications for years. And, for years, these big stock brokerage firms have been taking huge upfront fees for organizing them. Our limited partners won't have to pay most of these fees. Really, Andy, here is your challenge to move that decimal point in your mind. This Riverside deal is small time in comparison to the stock brokerage deals. And, as further proof to the limited partners that this deal is solid, I think that you should buy the first ten limited partnership shares." "Ten shares, that's $200,000, Don." "You've got more than that in equity, Andy." "Yes, Don, but not all in cash." "Well, Andy, then, we'll make cash. How about selling Salem End and refinancing your three-family?" "Geez, Don. I guess I'd have the money then but I'd really be leveraged out." Don felt that Andy was ready for the push to go from average to exceptional. "Andy, where were you two years ago? Are you ready for this, Andy? Yes, you'd be leveraged out but you'd have the three-family and a significant interest in one of the best shopping centers in the area. Or, as I've heard you say so often, 'You can just sit there and do crossword puzzles.' Have you got it, Andy?" "You'll help me, Don?" Don wasn't blinking, "Of course. I already have a good buyer in mind for Salem End. I'll help you do the prospectus for the limited partners and the bank. And, I'll get you started managing the center." Options were whirling in Andy's mind, "Don, could I do the deal just being the general partner? That way I could keep Salem End and the three family." Don had already thought about the sales approach that he and Andy would use with prospects, "You could, but I'd rather see you as a limited partner also. It will give the other limited partners a lot more confidence for this deal and the deals to come." After showing him a whole new world of potential profit, Andy wanted to make sure that Don was fairly compensated, "Don, you don't want in on this deal?" But, Don had already arranged fair financial settlement for the various components of the deals. "Andy, I think that you're aware of my home situation. I'm setting up a trust fund for the care of my daughter and I need cash more than equity. I've already gone over the deal with Jim Taylor. He's agreed to a $75,000 commission on the center and a $20,000 commission on Salem End." Andy was surprised to find out how far Don had already gone with the deal. "You've already discussed Salem End with Jim?" "And, with the Salem End buyer, yes." "You knew I'd go for the deal?" Don nodded his head, "I know it's a good deal. We think you're ready for it. Now, do you know that you're ready for it?" With a determined look, Andy held out his hand to shake hands in agreement, "OK, Don, let's put it together." Over the course of the next year, Taylor Realty Partners One purchased the Riverdale Shopping Center from Mark Stevens. Andy and Don are currently raising $2.5 million in operating capital to fund Taylor Realty Partners Two, to make additional limited partnership syndication purchases of larger investment properties in the Newton area. With most of Andy's time devoted to management and acquisition of the limited partnerships, two new investment property brokers have been hired at Taylor Realty. The investment brokers and the rental/ISP staff work under the supervision of Andy and Don. Could you be Andy? Lesson 26 ResourcesGo to Lesson Twenty Seven
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