## The Wealth Algorithm (10) – Plan B

What if you couldn’t secure the necessary funds to start your project, to reach your dream? Would you give up? I don’t think so. Having had a powerful intention, which you believe in; giving up, giving in, failure, whatever, are not part of your vocabulary, even when you talk to yourself (by the way, random, obsessive self-talk is destructive!).

If that was the case, the first step would be to revise your plan, especially the due date. Then, assuming you have a monthly income, before paying the bills, or buying anything, put 10% of that income aside. Open an investment account for that purpose, and deposit 10% of your monthly income in it, before you spend a dime.

Once your savings in that account reach \$1000, start investing. Your target is to make 5% a month. Below is an example of how you would manage your investment account:

Month   10%Savings   5% Yield   Monthly Total

 1 200 0 200.00 2 200 0 400.00 3 200 0 600.00 4 200 0 800.00 5 200 0 1,000.00 6 200 50 1,250.00 7 200 62.5 1,512.50 8 200 75.63 1,788.13 9 200 89.41 2,077.53 10 200 103.88 2,381.41 11 200 119.07 2,700.48 12 200 135.02 3,035.50 13 200 151.78 3,387.28 14 200 169.36 3,756.64 15 200 187.83 4,144.47 16 200 207.22 4,551.70 17 200 227.58 4,979.28 18 200 248.96 5,428.25 19 200 271.41 5,899.66 20 200 294.98 6,394.64 21 200 319.73 6,914.37 22 200 345.72 7,460.09 23 200 373 8,033.10 24 200 401.65 8,634.75 25 200 431.74 9,266.49 26 200 463.32 9,929.81 27 200 496.49 10,626.30 28 200 531.32 11,357.62

Over a period of 28 months, and because of the power of compounding, your \$200 monthly savings, have turned into \$11,357.62!

Notice that you haven’t been withdrawing at all. Every month, you add the monthly savings (A), to the 5% yield on the previous month’s total (B), then to the previous month’s total (C). Or: A+B+C=D. The sum, (D), is reinvested again, and so on. Please spend some time studying the above table. As simple as it may look, it’s so powerful and effective.

Another observation is that the increase from one month to the next is exponential, not linear! Although your total is about 11K at the end of the 28th month, you don’t have to wait 2800 months to reach a million. You’re actually pretty close. You could find out by applying the above formula till the monthly total hits one million. If you did that, you would find out that you would need a total of 125 months. Or around 10 years.

The assumptions we made were conservative: A \$2,000 monthly income and only 5% return. If either of these (or both) went up a little, the total number of months would decrease dramatically, again, because of the magic of compounding.

Now you have a backup plan to revert back to in case your original plan could not be implemented. As a matter of fact, you could go for plan B, even if plan A did work! Think about that…

The only challenge with plan B is the 5% monthly return. You might ask: How am I going to maintain such yield every month? What kind of investment am I supposed to use? You could either revisit the methods provided in this blog, or do further research. You will find what you’re looking for.

All the best,

The Wealth Maker

## The Wealth Algorithm (9) – Conclusion

So far, we’ve covered two out of the four steps mentioned in article (6) of this series. Namely, the business plan and funding options and processes.

One quick note about the funding options presented in the last article. Most of those organizations are based in the US. They offer their “services” to US citizens or US permanent residents only. Before you start working with an online funding entity, please make sure it supports your country. The concept is fairly new. It might not be available everywhere. It’s starting to emerge in Canada as we speak, but it’s more established in the US so far.

Assuming you’ve found the right source of funding for your venture, and prepared your business plan, now you need to work with the funding institution to present the business plan and obtain the funds.

If you went the route of online funding, most of the work would be electronic: Emails, completing online forms and applications, and probably by the end, some phone conversations. Be prepared to answer a wide range of questions, including personal questions. To some extent, this process may be more demanding than job search.

As long as you clearly know what you want (your intention), and how to achieve it (your business plan), you’ve already covered more than half of the distance!

Keep in mind that funding organizations are business-oriented. They want to make sure that by investing in your idea and your plan, both parties would create a profitable business. This insight needs to be clear throughout your presentations. You are not asking for loans or charity. You are a business partner, who is ready to use the offered capital to generate a positive outcome for both parties.

Once a verbal agreement is reached, the details must be documented in an Investment Partnership (TM) Agreement (IPA). The IPA would become the “constitution” of the project. It specifies the objectives, the parties involved, the timelines, rights and responsibilities, the way profit and/or loss are shared, and so on.

Carefully read the agreement in full, and check if you agree on all its provisions, before you make any commitment. If something is ambiguous, or contrary to your original understanding, never hesitate to voice your concern, till you and the funding party reach a mutually agreed-upon formula. This is your right as a business partner..

Next, as you start receiving the funds, you begin executing your business and action plans, day in and day out, till you attain your clearly set intention, and successfully satisfy the terms of the IPA.

I’m not promising you that the road will be rosy all the way. There would be some challenges. Use your capacity and wisdom to convert those challenges into new opportunities. This is easier said than done. Deal with them, one by one, as, and if, they come.

All the best,

The Wealth Maker

## The Wealth Algorithm (8) – Funding

We covered step one of your tasks in the previous article, which was creating a business plan. The post didn’t write the plan for you. It rather gave you the fundamental building blocks of that activity. The rest is yours to do, following those guidelines. If there was interest to give a full example of a business plan, I’d do that, but I’d need to receive such quires from the readers. You could easily post a comment under any article of this series.

Few articles ago, we excluded friends and family, for obvious reasons, as well as banks. So what’s left? Had this question been raised thirty or more years ago, the answer would have been: None!

However, nowadays, investors and entrepreneurs have almost untapped sources of online funding. With the proliferation of social networking, an era of business financing has been emerging.

Your first stop would be your social networks: Facebook, Twitter or Linked-In. The last is more professional-oriented. If you happened to be a member of Linked-In and have good and trusted connections, you might want to start there. Look for someone with a background in business management, investing, financing, etc. On the other hand, this person is honest and trustworthy. How would you know that? The simplest way would be to visit their profile and see what kind of connections they have. You could do more research and “investigation” till you feel satisfied.

The next stop would be to explore the following new resources of online funding. I’m presenting the three most popular here, but you could find more.

One example is referred to as “Crowd-Funding (CF)”.  Another is “Internet-Assisted angel investing (IAAI). A third is “Accelerator Programs (AP)”

Those are online resources, originally inspired (and to some extent created) by social networking. They are interested in funding new, and potentially profitable, ventures, against some guarantees from the investor.

Below are the definitions of the first two, as given by Wikipedia.org:

(1) “Crowd funding or crowdfunding (alternately crowd financingequity crowdfundingsocial funding or hyper funding) describes the collective effort of individuals who network and pool their resources, usually via the Internet, to support efforts initiated by other people or organizations.[1] Crowd funding is used in support of a wide variety of activities, including disaster reliefcitizen journalism, support of artists by fans, political campaigns, startup companyfunding,[2] movie[3] or free software development, and scientific research.[4]

Crowd funding can also refer to the funding of a company by selling small amounts of equity to many investors. This form of crowd funding has recently received attention from policymakers in the United States with direct mention in theJOBS Act; legislation that allows for a wider pool of small investors with fewer restrictions. The Act was signed into law by President Obama on April 5, 2012. The U.S. Securities and Exchange Commission has been given approximately 270 days to set forth specific rules and guidelines that enact this legislation, while also ensuring the protection of investors.[5]

(2) “An angel investor or angel (also known as a business angel or informal investor) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital.”

The following website is one of the pioneers in the area of AP: http://globalacceleratornetwork.com. Click on ” about” to get the following definition:

[Note: The definition below is the property of  http://globalacceleratornetwork.com. The author is not promoting or supporting any part of the definition. It’s given here as an example of this kind of online funding. There are other potential options that are worth looking at during your research].

(3) “The Global Accelerator Network consists of independently owned and operated organizations that utilize a mentorship-based startup accelerator model. It provides networking opportunities, training, special perks, and ongoing support for members of the network.

Championed by TechStars, the Global Accelerator Network was created in 2010 under the management of top accelerator programs and alongside the White House’s Startup America Initiative. In the spirit of supporting more entrepreneurs around the world, the Network’s mission is to ensure that 5,000 successful and experienced entrepreneurs and investors will mentor and support 6,000 promising young entrepreneurs. The goal is to increase their success rate tenfold and create 25,000 new jobs by 2015 as well as a sustained engine for growing these figures over time.

Our vision for the Global Accelerator Network is to empower entrepreneurs and accelerators, resulting in an increase in the pace of innovation and the ability for more communities to cultivate entrepreneurial success. We believe the proliferation of this model is very positive for entrepreneurs, investors, and start-up ecosystems. By bringing programs together to create and share best practices, resources and knowledge, we can increase the success of member programs and improve entrepreneurial ecosystems across the globe.

The Global Accelerator Network is a proud supporter and partner of The Startup America Initiative, the White House’s program to celebrate, inspire, and accelerate high-growth entrepreneurship.”

–End of definitions—

The above are only definitions, although they offer a good amount of details to start from. You need to research each one enough to see the full picture, then decide on the one that’s best for you and your selected venture.

All the best,

The Wealth Maker

## The Wealth Algorithm (7) – Business Plan

In the last post, we concluded by listing few steps you’d need to take, in order to finance your dream via a partnership.

Before you can engage a potential business partner in the process, you must be ready in terms of your plan and strategy of developing the capital to reach the intended result.

According to Wikipedia.org, “A business plan is a formal statement of a set of business goals, the reasons they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.”

In our case, there’s only one “goal”, which is the intention we clearly defined. Next, you need to explain “the reasons you believe that intention is attainable”.

There could be different reasons to different people. Imagine your potential partner asking you this question: “Why do you believe that you are able to grow this “X” amount of money into, say, one million, over the course of the plan”?

Here, one should look closely at his/her skills and talents related to managing money, and financial assets in general.

If you feel you don’t have what it takes to succeed at this task, don’t be disappointed, you’re not alone. That’s why lifelong learning is so important, not only for our bank accounts, but also for our physical and mental health.

Keep things simple, pick one or two methods from the ones we’ve covered here. Make sure you understand the ins and outs of each one, then use that in answering the above question.

Let’s assume you were interested in building an online store. After reading and fully understanding the article, expand your knowledge further. Do more research. Try to actually build a simple online store and see if your interest was still the same, more or maybe less. Take all of that into consideration while writing your business plan.

Once you’ve answered that question, the rest is much easier. You want to do your best to prepare a plan that is precise, presentable and convincing. Include a step-by-step action plan that specifies the activities, the desired accomplishment from each activity, the time-frame, and the resources you may need (financial, human, etc).

A good way to start would be to use a “template”. This is available online. Pick one that you understand and can fill out effectively, in light of our discussion above.

The following points cover major areas of a business plan as described on the BDC™ site (Reference: http://www.bdc.ca/EN/articles-tools/entrepreneur-toolkit/templates-business-guides/Pages/business-plan-template.aspx):

• Business overview: A brief description of your company and where it stands in the marketplace;
• Sales & marketing plan: The sales & marketing strategies that will be used to target your customers;
• Operating plan: A description of the physical aspect of your business operations;
• Human resources plan: Details on your key staff, HR policies & procedures;
• Action plan: The planned actions of the business over the next 2 to 3 years;
• Executive summary: A summary of the reasons you are seeking financing, together with a summary of your business operations;
• Financial appendix: The facts and figures that back up what you say in your plan.

All the best,

The Wealth Maker

## The Wealth Algorithm (6) – Partnerships

Since the beginning of this series, we’ve been on a journey. No hurry, no rush. It’s a journey of a lifetime. Most of us have spent their days under pressure, trying to do several things concurrently. It’s different here. When you come to this blog, I want you to set everything else aside. Read, focus, apply, enjoy the dream of eventually reaching abundance. Through these articles, your reading and application, together, we shall make that dream your reality!

Today, I’m going to talk about the second option of financing that dream, which is partnerships.

I had written an article titled “Investment Partnership (TM)“. It would be helpful to go back and have a look at it before you continue reading.

According to the online Merriam-Webster Dictionary (TM), a partnership is “a relationship resembling a legal partnership and usually involving close cooperation between parties having specified and joint rights and responsibilities”

The keywords in that definition are: Relationship, legal, cooperation, parties, specified rights and responsibilities.

How does that relate to our discussion?

Your intention is to reach a certain sum of money by a certain date. In order to do that, you need a capital to grow. Obtaining that capital requires some sort of financing. An investment partnership (TM), is the option we decided to pursue to secure that financing.

As I mentioned in the article referred to above, this partnership takes place between two parties: One party provides the capital, the second party provides the time, energy and expertise to grow that capital, over a specified period of time. The two partners are equal. They share profit and loss on a 50/50 basis.

The partnership agreement “specifies” the details of the “relationship”: The legal aspects, the type of cooperation, the involved parties, and the rights and responsibilities of each party. It also specifies the capital, the timeframe, and the way any outcome shall be shared between the parties.

From your perspective, here is what you need to do:

1. Prepare a convincing business plan, that outlines your strategy of how you intend to grow the capital
2. Find an interested party, who has that capital, and who is willing to consider a partnership with you
3. Present your plan, and hopefully, win the approval of your potential partner
4. Work with your new partner on the partnership agreement
5. Get the funds and start working!

In the next article, I’ll shed more light on each of the above steps. Please spend some time on this post, and let me know if you have any questions or comments.

The Wealth Maker

## The Wealth Algorithm (5) – Financing Your Dream!

We’re now ready to tackle the process that will take you from your current financial state (networth) to your dream (the clear intention you set few posts ago).

I’m not going to use any assumptions concerning your work status. So whether you were employed, self-employed, unemployed, running a small business, etc, our discussion would start from the networth we calculated in article (3) of this series.

There are so many ways to make money. I’ve covered a number of them in this blog. You could go back and pick the one that suits you. We’ve talked a great deal about value investing, making money online. I touched on HYIP’s. Then finally spent few articles exploring online trading, including binary options trading.

Any one of those requires an initial investment, a capital, a principal. Each method employes a certain technique to grow that capital, while preserving it (this is quite important).

The question now is this: How would you go about securing that principal?

In general, there are two ways: You could either borrow the money, or create a partnership.

The first route includes banks, friends, family, government funds, etc.

The second is a sort of business deal between two equal parties: One party provides the capital, the second provides the time, energy and expertise to grow that capital.

The first option could be difficult these days. Requesting a business loan from a financial institution (like a bank) presents two major hurdles: a) you must provide enough evidence that you’re capable, financially, of returning that loan, at the end of the term. The bank doesn’t care whether you succeed or fail!

The second issue is interest. You might end up paying 50% on top of the original loan in interest. If the loan was \$100K, you would be required to pay back \$150K at the end of the loan term. Those 50K would come out of your net profit. In some cases, the percentage could be more, depending on how convinced the bank would be of your eligibility for that loan.

Asking friends or family members for financial support to start a business or enter an investment adventure, would raise many eyebrows, and would put you under the spotlight for the duration of your journey. This would add to the pressure, and would exhaust a good deal of your energy.

In the next article, we’ll explore the second option, as I believe it’s the path you should take.

The Wealth Maker