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Wealth Building – Other People’s Money (OPM): What the Rich and Wealthy Have Known for Years

Getting rich isn’t all about hard work. In fact hard work has got little to do with getting rich. It’s not that I don’t advocate hard work, I do. I love working hard but I especially like to see myself and others working smart. I know that getting rich and achieving success is not exclusively the domain of blood, sweat and tears. I’ve seen friends, work colleagues and family work themselves to the bone for little or no reward.

The Cult of Hard Work, Self-Sacrifice and The Golden Goose

There is a cult of self-sacrifice evident in our culture that warrants you to be extra busy, working super hard, and putting in crazy hours. When it comes to personal wealth building and attaining success, you’re the golden goose. However, you can only push the golden goose so hard before he/she stops laying those golden eggs. Without exception every golden goose will eventually run out of energy, capacity or enthusiasm. Therefore, learning how to utilise Other Peoples Time, Money and Skills (i.e. leveraging) is a pre-requisite to becoming rich, building wealth and achieving success.

Other Peoples Money & Leverage

In general terms, getting access to Other People’s Money (OPM) is a form of leverage that enables you to go beyond the limits of your own resources and instead apply resourcefulness to everything you do. In business terms, leverage is the key that differentiates self-employed person who owns a job from the business owner who own a business. In financial/investment terms it means getting access to cash that’s not yours in order to buy assets that you control and that produce income.

What the Rich and Wealthy Have Know for Years

The richest and especially the wealthiest people in the world have known about leveraging Other People’s Money for years. Everyone from Jean Paul Getty, Aristotle Onassis and Donald Trump have excelled at this wealth building principle numero uno. Their use of OPM to buys assets is legendary. Onassis in particular is known for having secured contracts to transport ore and oil in ships and tankers he didn’t yet own and then going to the banks securing the loans to buy the ships and tankers using the contracts. A brazen and gifted deal-maker if there ever was one!

People go about building wealth or acquiring assets in different ways based on their background, past experiences and what they have been taught or know about money. For the most part people think of great riches and wealth as largely unattainable because of the model or mindset they have about money. What most people fail to understand is that you actually don’t need money to make money. Sure it helps but what you really need is access to Other People’s Money in order to make money.

The Benefits of Utilising Other People’s Money

OPM buys you time; it enables you do things before you would otherwise be able to do them. It allows you participate in deals your own resources don’t allow you to do. It enables you make choices you couldn’t otherwise make. It takes the average person many, many years to accumulate wealth or build a business entirely from their own resources. By utilising the power of Other People’s Money you can fast-track your personal wealth building or the growth of a business. Importantly, your personal wealth building is no longer limited to what you have been able to save and invest from your earned income.

Getting High on OPM – Real Estate

Most people’s typical first experience of using Other People’s Money is when they take on a mortgage to buy their home. Typically, their initial down-payment combined with their contract of employment that demonstrates their ability to produce future income is enough for them to secure a mortgage loan against home. Unfortunately your home is not an asset, well it is, but it’s the bank’s asset as they are making income from the loan advanced, not you. If you can get a bank to advance you a mortgage loan so as to purchase an investment rental property (an asset) whereby you get to retain what remains of the rental income after you pay the mortgage, then you have used Other People’s Money to buy and asset to produce income. In order to secure this loan you need to demonstrate to the bank that you are a safe bet. They will typically want to see that you have at least 20% of the purchase price as a down-payment and sufficient net income being generated by this asset and other sources to ride out any changes in interest rates, rental void periods etc.

Getting High on OPM – Business

In business, entrepreneurs and business owners get access to Other People’s Money when they write a business plan which they present to a business agent or venture capitalist i.e. investors. This process is known as raising capital. In return for the money (known as capital) received the investor who provided the capital typically receives equity (i.e. shareholding) in the business. Money can also be borrowed from a bank and the bank is repaid the principal and also receives interest on the loan. It’s the business owner’s job to put this capital to good use; to produce products or services that generate sales revenue to pay back the loan and, of course, all the other expenditures of the business.

Other People’s Money is always available and accessible to a greater or lesser extent depending on overall market conditions. Your first responsibility as an entrepreneur or investor seeking capital is to understand and inform yourself as to the multiple sources of OPM and numerous deal structures that utilize OPM.

Jumping Through the Window of Opportunity

Finally, the chief take-away from all this talk about Other People’s Money is that rather than saying to yourself “I can’t afford to start a business” or “I don’t have the money to invest in that deal” you now know there are no real excuses or limitations. Not that using Other People’s Money is without its pitfalls. Like every financial transaction there are inherent risks. Firstly, you are liable to repay the capital borrowed and generally provide an agreed additional return to the investor. However, that’s not up for discussion here. The key thing for now is to realize that you can always get access to Other People’s Money to enable you participate in deals and do things you previously thought weren’t possible. You can start jumping through the window of opportunity when it’s open…and as you begin implementing this principle of Other People’s Money into your business and personal wealth building endeavors you begin to realize its open all the time!

How To Become a Horse Racing Handicapping Expert and Make Money Off The Races

It is not impossible to make money off the races, but it does take work to become a horse racing handicapping expert. Like anything else in life, you must want it to succeed at it. The reason is that so many people are trying to do the same thing.

On any given day across the country and around the world there are people who are doing their very best to handicap the races and make money. For some people it is a matter of necessity. For others it is a hobby, but they take it seriously. Whether it is an intellectual exercise or a matter of financial survival, there are people who are working at handicapping.

So if you are trying to make money at it, that is what you are up against. The only way you are going to make money and stake your claim to the millions that are wagered everyday is to become an expert.

There are different ways to become an expert. One way it to learn everything you can about thoroughbred horses and the business of racking. Unless you were born into it and grew up on the backstretch, that isn’t likely to happen.

A route that is easier and more feasible is to become an expert in a smaller sphere of influence. What I mean is that you need to select one track or circuit and learn as much as you can about the people who race on that circuit. If you have ten trainers who regularly race horses on one circuit and get to know their moves, you have a chance to win money at horse racing handicapping.

It still isn’t easy, but it is possible. It takes hours of study and you must keep notes. At first it seems like a daunting task and there is a lot of time spent just watching. Like a fisherman who waits for a fish to swim by and take the bait, you must wait for the right situation when you think the trainer has gotten his or her horse in the right situation to win. Then you need to know that the trainer is indeed going to make the move, or in the jargon of the backstretch, to “send,” the horse.

You can study the trainers on your own and begin to figure them out, but using a good method of tote board analysis like the one in True Handicapping will make it easier to figure out if the stable is betting the horse. My advice is, if you truly want to be successful, work, work, work, and use a method like true handicapping to justify a good bet.

You may just be one of the few who through hard work become a successful handicapper. If this sounds like too much work or effort, then I suggest you consider yourself a recreational handicapper and confine yourself to bets you can afford, and as they say, “Don’t quit your day job.”

Catering Business Profits, Earnings and Salaries – How Much Money Can You Really Make?

Many people have turned their love of cooking and entertaining into a good living by starting catering businesses.

Catering is a multi-billion dollar industry in the U.S. and as one of the fastest growing segments of the food and beverage industry, the catering business offers great opportunities for those wanting to start a small business with a low start up cost.

In this article we will look at catering business profits, earnings and salaries and how much money it is really possible to make in this industry. Then we will examine some of the things that separate the really successful players from the amateurs.

Is a $100,000 Yearly Profit Possible in Catering?

Many people consider a $100,000 pre-tax salary or profit to be a benchmark for success and they wonder if they can reach this level of earnings in catering.

Most small catering business owners who put in the effort can expect to earn between $20,000 and $40,000 profit per year for the owner during the first couple of years. After a couple of years in the business, you can easily scale up to earning a ‘six figure’ annual income from catering.

Tips for Getting to the ‘Six Figure’ Level

1) Forget catering from your home kitchen if you want to get to this salary level. Business savvy caterers do volumes that require them to either rent commercial kitchen space by the hour, arrange access to restaurant kitchens during off-hours or focus on ‘on-premises’ jobs only and use the kitchens of their clients.

2) Successful players love spending time creating menus, following food trends and interacting with people without neglecting the business side of catering.

3) Start to create a powerful brand right from the start with your logo, company values and unique service that will grow into a valuable asset that allows you to command a premium price for your catering services in the market.

4) Develop systems for every part of your business to streamline day-to-day operations. Analyze the way that you and your staff work and strive to increase productivity.

5) Understand that there are ‘niche’ markets within the catering industry that you would never think of until you really start looking. Top caterers find these untapped opportunities, and carve out a business catering to the specific needs of these groups.

6) Perfect the process of consulting with new clients and learn how to politely up-sell them on some of your more expensive offerings.

7) Realize that you are leaving money on the table if you don’t also up-sell additional event related services to your customers.

8) Learn how to hire, train and organize a small team to assist you with food preparation, delivery, service, and even sales if you want a realistic chance of getting to an income level above $100,000.

9) Don’t neglect traditional advertising methods but also pursue other modern marketing methods such as networking, cross promotions and guerrilla marketing.

10) Successful caterers also recognize the importance of customer referrals. Customers may introduce friends to you because they like your food and services but there are also other ways to get them talking about your company.

To get started on the right track, do as much reading as you can about general small business management and the catering business specifically. Many highly successful caterers have published start up guides and you have a chance to learn from their mistakes instead of making your own and you can benefit from their expert advice and insider tips.

It is possible to make a lot of money in the catering business if you put in the effort. Reaching a level of earnings that will allow you to make a ‘six figure’ salary from your catering business is entirely possible within your first two years in business.

Salary Negotiation: How To Earn More Money and Respect From Your Employer

Despite how important fair pay is to most of us, effective salary negotiation is an often misunderstood and avoided topic. Current research indicates the average duration of a position today is 3.8 years. Over the lifespan of your career, how well you negotiate raises or starting pay will have an enormous cumulative effect on the quality of your life.

So why does this skill remain elusive for many career professionals?

Most of us do thorough research and prepare extensively for a job interview. We create the perfect resume, slave over cover letter drafts, and rehearse answers to anticipated interview questions. We make sure we’re dressed right, have references, and are on time. But all too often, only cursory attention is given to thinking through how, when, and why we’ll end up being happy with the terms of our pay.

One problem is that cultural taboos in our society make talking about money a no-no. Many of us regard money negotiation as inherently unseemly, or we feel guilty about not accepting what’s been offered so nicely. Isn’t haggling supposed to take place if you’re buying hand-made rugs somewhere in Turkey?

We want to believe that the first offer we hear should be the highest dollar figure possible; moreover, we don’t want to “rock the boat” and potentially ruin our chances of landing that great job. That voice inside of us whispers “Everything in this interview has been going great! Don’t wreck it now!”.

Like it or not, though, you’re a negotiator. You can’t get off this ride. Negotiation routinely takes place in dozens of ways in our daily lives. Given the fact that you will make or lose several thousand dollars in the span of a few minutes, learning how to respectably negotiate your pay is vital! Notice I say respectably.

Unfortunately, I see countless candidates who either come off way too aggressively, or much too meekly, for their own good. This is often because of a lack of self-preparation and practice. Many candidates also fail to realize their position in the marketplace and the position of the employer. Not good!

The good news is that salary negotiation skills can be learned or improved upon. Here are seven key tips to being paid what you’re worth while maintaining a healthy respect others have for you:

o Don’t believe that effectively negotiating your salary means that you must have the mentality of a used-car salesperson! You aren’t being slippery, out of line or ungrateful to not accept the first figure that’s tossed out. Most employers value candidates who clearly possess self-respect and confidence in themselves; these qualities are revealed through the skill and poise in how you negotiate your pay–they are aso revealed if you do nothing.

Think about it: Doesn’t it make sense that if you demonstrate effective negotiation capabilities for yourself, that in turn you’ll negotiate smartly for your employer, too? Hiring managers pick up on this.

o Do remember that your value is far more important than a number somewhere on a spreadsheet. Yes, this is true despite common cries that “payroll budgets being fixed, this is the best we can do” or “in this economy, you must be realistic.” Employers by and large are not searching for “cheap bargains” but want value in their employees.

A common misconception is “I’ll have a better chance of getting the job if I don’t ask for much money–I won’t cost as much as other candidates.” Don’t go there! Concentrate on the value you bring, not how little you cost. By the way, if you do this properly, the question of “previous salary history” should be much less relevant. This means you will have a better chance at jumping to higher ranges faster in your career.

o Don’t (and I mean never) accept any form of benefits before you negotiate your salary. Why? Once some form of compensation other than salary is accepted by you, the employer has leverage in justifying why your salary should be lower. Remember to always get agreement on the starting salary first. Then negotiate non-salary benefits and special considerations afterwards.

o Do delay talking about compensation; try to discuss your value, and the specific benefits you can bring to the table, for as long as possible. The employer should perceive you as a valuable, one-of-a-kind resource–not an off-the-shelf good with a price tag.

Think of those high-end infomercials that delay revealing what the price of the offer is until the very end (if at all). The whole point of the infomercial is to draw your attention to the value of the good or service and its many different uses and applications.

Certainly something that clearly validates a gain or cost-savings of $25,000.00 would be attractively valued at $2,499.99. But would you really pay attention to an ad that immediately said its cost was $2,499.99? Probably not! The same psychology applies to salary negotiation. The longer the interview process continues, the more likely you will be regarded as a valuable resource obviously worthy of upper-range pay.

o Don’t accept any offer, no matter how lucrative, on the spot. Instead, express your continued interest in the position and how you clearly see yourself making contributions (specify them one more time again). Then always ask for 24 hours to consider the offer. Certainly a day will give the hiring manager time to find any necessary “wiggle room”, if need be.

Be passionate and excited, but don’t lose your objectivity–any position that will be the center of your daily professional life for years to come won’t melt in 24 hours. Right?

o Do remember the old axiom “he (or she) who speaks first loses.” Wait until an offer has been made–but don’t respond immediately. Remember that in many cases, what is initially offered to you may be the lowest figure the hiring manager dares to put forward.

This is mission critical territory: Often, even casual remarks made by you constitute implied acceptance of the offer…Which can quickly become explicit acceptance as the conversation moves on. Don’t let this happen! Instead, intentionally steer the conversation back to the responsibilities of the position. Who will you be supervising? What are some tangible, specific contributions you see yourself making? Where do you picture yourself in the organization in the future?

The greater long-term picture you create, the greater the likelihood you will negotiate more effectively. You can only really begin to negotiate after you have clearly brought to life realistic present and future scenarios.

o Don’t over-negotiate. How do you know when to recognize what is too little or too much? By researching your market ahead of time. Don’t just go to http://www.salary.com and think you “should” be earning a certain dollar figure without taking into consideration the unique opportunities every employer possesses. This is not really true research.

A salary is compensation paid for services performed. Your salary should be commensurate with your skills and experience built yesterday, but negotiated for the work you will be doing today and tomorrow. Remember, you don’t get what you deserve in life…You get what you negotiate!

Would you like more help? Check out this month’s HireWorks Recommends for some great resources.

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