Pay attention to your surroundings

In entrepreneurial life, or life in general, there are a lot of ways to become successful. You can make a lot of money, be the smartest individual in your workplace, or do a combination of anything in between. However, the common denominator to successful people is that they carefully choose the people they have close relationships with.

We've heard age-old adages such as, "if you want to be rich, befriend and study rich people." Ironically the same thing goes for success in life. Relationships that bring you down (or constantly discourage you) are going to steer the focus on success in another direction. And losing focus is the worst thing you can possibly do when on the road to success. When you lose focus...you crash.

The problem for a lot of entrepreneurs is that they tend to believe, they owe it to everyone else to  stay socially coherent.  In reality it's the other way around, they owe it to themselves to stay focused on the task at hand (whether that be to build a company or work towards financial independence). The relationships that center around a debt, are usually not the kind of relationships to continue when attempting to become successful. We've been there, done that, and even built a monument for it.  Unhealthy relationships will keep anyone's focus from the task at hand. And in doing so, prevents the ability to succeed among the fierce competition.

Our company was really built when I, Stephen Alred(founder/CEO), decided to take a full 3-months away from family and friends and work. Keeping my focus only on my company. Of course family understood what I was trying to do, but many of my closest friends didn't understand. They thought it was a waste of time and said it was "unhealthy", and rather I get out and have a great time with them. But, by surrounding myself with a lot of healthy relationships I was encouraged to build my dream, one stepping stone at a time. The reality is if I would've stuck with those that discouraged me, I would've never gotten where I am now. Not to say socializing is a bad thing, dreams just happen to come first. If you were to look at the friends who encouraged and the friends who laughed, you would see an interesting difference. Those that encouraged (great modelling career, fashion week; one of two American representatives for the Shagya breed worldwide; three have their own companies; one has a very lucrative corporate job), those that discouraged (work at a summer camp; trapped in a 9-5; can't decide on a career; unrealistic goals for the future).

Success is a very unforgiving entity. You focus, you see your dreams realized. You don't focus, you see those same dreams, dashed against the rocks. A key nominator of the focus equation is the quality of individuals you surround yourself with. Low quality people= low quality focus. High quality people=high quality focus.

Your Own Worst Enemy

We wrote this article to detail how managing your own investment portfolio can sometimes hurt more than help if not managed correctly. We’ll quickly go through some reasons why individual investors, on average, lose money when they invest themselves.

Overconfidence
Every investor believes they are above average and can, therefore out-smart the self-correcting markets.  The trait of overconfidence is usually observed in single men. Mainly, because men do not have very many financial obligations, which frees them up to take certain risks when investing to make a positive outcome. The down side is that they usually produce a negative, or neutral return after trading commissions are factored in.  

Excessive Trading
Excessive trading does nothing but rack up commissions for the brokerage/advisors that manage your trades.  Generally excessive trading result from individual investors getting a “tip” from leading analysts. What they do not realize is that millions of people received the exact same advice.  This negatively affects their trading strategy, as everyone moving at once will only serve to raise or lower market prices.

Stubbornness
Investors who are stubborn tend to not realize when they have actually lost out on potential earnings.  They tend to embody the last two attributes and are overconfident that their trade is the right one.  Not admitting when you’re wrong works in investing just like it works in real life. You lose out on beneficial opportunities by not seeing the big picture.

Conclusion
These are just a few mindsets that may get you into trouble when investing for yourself.  Taking advantage of professional advice may limit your margin of error; but it will not completely eliminate losses incurred by the attributes listed above.  

Our reference article for this post was written by David K. Randall of Forbes.com.

Using revenue to repay loans, Revenue Loans is orginal

On its website, Revenue Loan proclaims, "Revenue Loan provides funding to companies in exchange for a small percentage of future realized sales. This is Revenue Based Finance"

From the get-go we see great things for future entrepreneurs and this company. Revenue Loan has no interest (no pun intended) in taking board seats, or equity in a company. It simply settles for a percentage of the borrowers revenue until the loan is paid back plus interest.

Best thing about this arrangement...they aren't primarily concerned with the payback period.  This takes most of the pressure off of the company's owner. In turn it allows the owner to concentrate on growing revenue during the start-up phase; all while it takes a cut out of that growing revenue. Revenue Loans does, however require up to 5x the amount of the borrowed funds to be repaid. This number may seem a bit too high. But it is a fair multiplier considering the owner doesn't have to give up equity, control, or focus when borrowing.

All in all, we think this is a breath of fresh air for any interested business owners. With the exclusivity of venture capitalism, and the scarcity of banking loans...the repayment structure(revenue based financing) of Revenue Loans seems to be the answer.

Right now Revenue Loans is currently in series funding, but keep it in mind as you search for new funding sources.

Toro!! Don't dodge the bull market

Etoro got its start in 2007, and has since been called the "Zynga for men." Its goal is to make investing fun and social. The trading platform supports in commodity, currency, and index markets only.

There are two options to "socially investing" on Etoro: trading accounts and practice accounts.  A fringe benefit to having a trading account, weekly trading challenges where the winners receive reward bonuses(in cash).

Here's the kicker, Etoro offers not only in-house trading guides and tutorials on the website. It offers the ability to follow better performers, as well as ask more experienced traders for investment counsel.  The personal trading coaches (for beginners) and the personal account managers (for professionals) are also a nice touch in winning over potential users.

Etoro currently has 1.5million users, and employees spanning four different countries. There's nothing like making something as stressful and hair-pulling as investing, fun and social.

Become the banks, without all the economic meltdown "stuff"

Peer-to-peer lending is one potential investment opportunity that many financial professionals don't include in a client's portfolio. But why? Any client can lend their money at as much as 21.64% APR, where else can you get a definite 20% return on your initial investment?  There are some risks of default but it's very rare on this site considering that borrowers have to show, and update their credit scores.

The two major lending sites are Prosper and Lending Club. These two companies have taken advantage of the fact that banks have dried up most of the resources for consumers, and entrepreneurs to borrow money.  In a lot of cases, these two sites serve as a place where average consumers can borrow money at a lower interest rate to pay off other debts.  A refinance of sorts, but for consumer debt.  They each have a collections process in case an account becomes delinquent, and Lending Club even has an in-house "No-fee" IRA account option. 

For the investor, the sky is the limit with these two companies.  With both internal and external collections agencies on call, they are able to make sure that the principal is returned to the lender.  Where Prosper has claims of ROI's high as 16%, Lending Club offers risky loans as high as 20%.  Of course this wouldn't be a blog post of ours if there wasn't a way to creatively implement an investment portfolio at a no-cost basis. How would it sound if you can potential borrow at 6% from Lending Club, then turning around and lending that cash out at 20% (with only 0.7% going to processing). How does a 13.3% return sound with no cash coming out of your pockets? We can hear the cash registers ringing in your head.

As with all of our creative investment processes that we present to our clients, there is a caveat. We would not recommend going through with any kind of lending procedure without consulting a lawyer to make sure the "terms of use" are fully understood by all parties involved. Also, an accountant wouldn't hurt either. They would serve to help you realize what this could do to your taxes come 2011. You wouldn't want to make just enough cash to bump you up into the next bracket, while still having the same income.  Lastly, due diligence is always the key to your investment success. Vet all options and make sure that the lender you choose is reliable. Even with each company having a collections agency on tap, there's still a chance of delinquency

Want to learn more about creative investment opportunities? E-mail a consultant at info@cloud9-financial.com for any questions.

Leveraging A Credit Card

We recently came across an article from MyBankTracker, concerning four steps to avoid credit card debt and decided to post a small "blurb" on the subject.

At many different financial consulting/counseling companies they don't approve of debt leveraging, or using debt positively due to its enticing features.  The most notable enticing features are the ability to borrow more than you actually can pay back on a loan, and being able to spend up to your credit card limit when you have low funds in other accounts.  This is the wrong way to go about debt leveraging.

The right way to take advantage of leveraging debt, is to consider all cons along with the pros. Yes, you have pretty much free money. And if used effectively you can make that money go to work for you.  For example...say you take out a $1000 cash advance on your Bank of America credit card. Bank of America typically charges a 4% transaction fee on the principal withdrawn, and interest rates accrues daily from the time of withdrawal. If you can find investments that have a higher return than the interest rate(and the initial 4%), you will effectively be earning free money. If you pay back your advance within the allotted time period, you could possibly raise your credit score in the meantime.

In reality, investments like these don't occur very often. But when they do, we recommend sound due diligence before any investing decision is made. Above, we explained just one way to leverage the established line of credit on your cards. As long as you pay the lender back, the more creative the uses, the higher the reward.  With that statement comes a caveat: the higher the reward, the higher the risk.

Cloud 9 consultants would only recommend creating unproven leveraging techniques if you are experienced in the field of financing.