Money, Money, Everywhere?
Why your financial potential is really a matter of Resourcefulness, not Resources.
Why your financial potential is really a matter of Resourcefulness, not Resources.
Lot’s of people think they are limited to the major banks or financial institutions for financing when starting a business or expanding one.
For many, this is conditionally true — but it is only true because they do not have a trusted network to leverage.
Build that network, and you will be surprised what you can accomplish.
People that you have established trust with are the easiest to approach for money.
Outside of business and the authority of your brand, who have you established trust with the most?
Friends.
They say never mix business with friendship, but that’s only true for deadbeats who make excuses and harm friendships.
Let me tell you a story.
Rewind back to 2021.
I wanted to purchase a bunch of crypto miners to get started with a home mining project.
Problem : traditional credit cards with rates 15%+ are too risky for this. Too much chance I end up upside down.
Solution : I found a credit union with low rate Visas, as low as 6.9% at the time. No brainer. I loaded up a card and was off to the races. (Thanks to the FED, you cannot find credit card rates that low anywhere anymore)
New Problem : My primary business needs to upgrade hardware, a new hardware just came out in limited supply immediately after I bought those miners. I want that hardware very bad, it will increase my productivity 2x and I know that this year will explode in sales at the end of the year. However, I am maxed out credit card wise thanks to my new mining farm, and don’t want to use any of my other higher interest rate cards for what would be a $10,000+ hardware purchase. All of my other cards were 25%+ APR.
Banks = “Your debt to income ratio is too high”.
No loan for me….
New Solution : I asked around to my friends who I knew were doing well financially, offering them interest in exchange for a loan.
I structured my proposal like this:
“Hey, I need some funds for new hardware for my 3d printing business- if I pay you 5% interest on a 12 month term, would you loan me $10,000?”
Some people weren’t in a position to do it, or were possibly caught off guard by my proposal. It only took about 5 days for me to find someone.
Surprisingly, it wasn’t even a negotiation, my buddy Wes just said “sure man”.
I wrote up a simple contract, we both signed it, and boom, I had my funds.
8 months later after the New Years sales rush, I had paid him back in full, plus 5%, and I threw in some 3d printed gaming accessory stuff just for fun.
“Thanks man! Your loan helped immensely!”
“Anytime Man!”.
And that’s it. He meant it.
I don’t have much doubt that if I ever needed money again in a pinch, I could ask Wes and he would be willing.
This was the first time I had approached a friend for money, and it made me realize that my financial potential is really a matter or RESOURCEFULNESS, not resources.
I didn’t have to rely on banks.
I didn’t have to find a “hard money” lender (though technically my friend was acting that way)
I didn’t have to subject myself to terms that harm my bottom line
I was able to increase my production, increase my product quality, and avoid paying 25%+ interest.
Ask, and you shall receive. OR, ask… and you have a place to start negotiating
Of course, being able to do this is dependent on having a friend network who trusts me.
They have to trust me enough to think there is a good chance I wont be a deadbeat.
And they have to have the resources available to take that risk without feeling put off by it. (Approach your wealthier friends)
If you approach people who consider $10,000 to be “ALOT of money”, then your loan is MUCH bigger risk to them. Don’t be a dick.
Trust isn’t everything though….
ALWAYS offer something in return.
Anything less is presuming on a friendship and possibly damaging it with an arrogant energy.
I would never approach someone to borrow without offering something in return, usually interest as a percentage.
I would never presume to treat anyone like a personal piggy bank.
If they are going to extend their resources to me, they are getting a reward for it.
This is the best way to approach friends for money.
And most of the time I would rather do this than seek a “Hard Money” lender.
Hard Money lenders can be like Loan Sharks if you are not careful.
You really have to read all the terms to make sure you aren’t biting off more than you can chew.
If I wanted to invest in some real estate that was going to be a sure win, I’d put all the papers together just like I was going to approach a financial institution, have it ready, and then present it to my friends first, just to see if it’s possible.
If the opportunity is appropriate, offer more than simple interest.
For things like real estate or rental properties, it is probably more appropriate to offer a stake in the earning potential, rather than simple interest. Especially if you are asking for more than a few thousand.
I’d offer a stake in the output of whatever it is I am doing
That way, I keep my friends!
Yes, I am looking for better terms than banks or shylocks, but I am also not trying to take unfair advantage of a friend! Important detail.
Just make sure you are the kind of friend that lives up to your word, and pays them back + interest as promised. And the world is your oyster.
If you are low on resources, resourcefulness can always solve that problem.
Thank you for reading!
Until next time….
Onward and Upward Everybody!
-Chris
Automated Income Lifesyle w/ Chris Morton YouTube
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