Make The Slow Market Work For You!

Got a wonderful friend who has begun to turn a downturned economy into his dream of a lifetime. He's taken low cost real estate, the bargain basement priced luxury items and has begun to turn it, or "flip" it for a small profit.

Don't be afraid to make a small profit; its either a small profit or absolutely no profit. As we say, "a win is a win". By improving some networking techniques and some strategy assistance, one of our recent success stories has created "Turn Town Realty, LLC.". Turn Town has found a way to take the Seller's bottom number and brokers that into the top number of the buyer with precision.

A fall of more than 10 percent in the average apartment price in Manhattan in the third quarter from a year earlier attracted buyers who pushed up the number of sales by over 45 percent in just one quarter, industry reports showed Friday.

Since peaking in the first half of 2008, Manhattan apartment prices have fallen an average of 25 percent to 30 percent.

The Manhattan residential real estate market had been largely unscathed during 2008 as other U.S. housing markets were floundering, but it hit a wall in September 2008 when Lehman Brothers collapsed and the financial sector fell to its knees.

About 20 percentage points of the 25-to-30 percent drop can be sourced to the months after September, said Jonathan Miller, president and chief executive of Miller Samuel appraisers and the author of the Prudential Douglas Elliman Manhattan Market Overview quarterly report.

Other once-hot U.S. housing markets have seen prices fall by more than 50 percent.

"We're not done yet," Miller said.

New York City is still wrestling with a Wall Street that is trying to reinvent itself, a disproportionate number of layoffs of high-wage earners and new condominium construction.

"There's a lot of unwinding to go," Miller said. "We're moving toward stabilization but we have a ways to go."

The average sales price of a Manhattan apartment fell 10.6 percent to $1,323,462 in the third quarter from a year earlier, the Prudential Douglas Elliman Manhattan Market Overview showed. But it rose 0.8 percent from the prior quarter's $1,312,920.

Prices per square foot fell 16.5 percent to $996 year over a year earlier and were off 5.7 percent from the second quarter, the report said.

The third-quarter median sales price -- in which half the prices were higher and half were lower - dropped 8.4 percent to $850,000, but rose 1.7 percent from $835,700 in the second quarter, the Prudential report said.

While the number of sales fell 16 percent from a year earlier to 2,230 sales, it soared 45.6 percent from the second quarter. Brokers attributed the rise to unleashed pent-up demand from the prior two quarters.

Still, deals are taking longer to complete. Buyers are cautious and mortgage lending is tighter than some brokers and experts have seen during their careers.
A for-sale apartment spent 167 days on the market, up from 134 days a year earlier.

An $8,000 federal tax credit for first-time home buyers helped fuel sales of studio and one-bedroom apartments, where prices fell 30 percent and 24 percent respectively from a year earlier, Corcoran Group's quarterly report said. The credit is scheduled to expire at the end of November.

"The credit is still too tight. We need more jumbo financing for New York City," Pamela Liebman, Corcoran chief executive said, referring to mortgages over $417,000.

Keys to Small Business Funding

There are a few things that an entrepreneur should consider to increase odds of securing a loan:

Business financing comes in all shapes and sizes these days so we want to ensure you leave no stone unturned when you are looking to secure funding and researching financing streams for your small business entity.

Be prepared to meet your banker: Make sure that you are thoroughly prepared when you go to your banker’s office to request a loan. You need to show your bankers that a loan to you is a low-risk proposition. Come to the meeting equipped with a well-prepared business plan and finance package.

Identify how much capital you need: Have you determined how much capital you need? Why do you need this amount? Have you calculated your start-up costs? Is it to purchase new equipment, down payment on an existing business or do you need start up funds to cover operation? This will help you determine what type of lender you should approach.

Have a good relationship with your local banker: The old saying people do business with people they know and trust. Well, if you have built a relationship with your local banker over the years, they are more apt to support you in your new business venture. Do you have your main business account with them? You should!

Take time to review your personal credit report and finances: Your credit score is sure to play an important role in your personal finances. If you think that your personal credit won’t affect your ability to get a business loan, think again!

Make sure your house is in order: Your credit score not only determines your ability to get credit, but also affects the interest rate. This includes paying down your credit balances and taking time to take care of issues prior to your meeting with the bank. If you cannot handle your own personal finances, he’ll question whether you can run a business.

Check out resources such as Small Business Administration: The U.S. Small Business Administration (SBA) is a federal agency, responsible for assisting and protecting the interests of American small business. The agency operates through a series of field offices around the country as well as in partnership with public and private organizations to offer technical assistance to small businesses. The Women’s Business Center is funded in part by an SBA grant., and we offer technical assistance to small businesses.

Bureau: Small Biz Collections Woes?

I have owned several small businesses in my time, some Not For Profit but most For Profit entities. The grand-daddy of all the problems experienced across the board were interjected when payment options for a service or product were permitted.

A lesson was learned very early that more than two payments would yield multiples more in potential collection concerns and follow through. What should a small business do to protect themselves while offering a service or product with multiple payments?


1. Keep the 40/60 fee split, but require the 40% up front and only provide an outline of the business plan. The client can then accept or sign-off on the outline and pay the remaining 60%, after which the full plan changes hands.


2. Bill 75% to 80% up front, write the plan and deliver it to the client, and then bill the remaining 20% to 25%.

The advantage here is that you get the majority of the payment up front, and the remaining fee is much less than the 60% you were originally invoicing on the back-end and having difficulty collecting.

But your business problems may run deeper than a pay and delivery schedule, according to Jeffrey Davis, founder of Mage LLC, a Mass.-based small-business consultancy. The source of trouble could lie either in your clients - or in you.

"If he's making the deliverable and [the client] isn't paying, he's not qualifying his clients properly," Davis says. "If he's qualified them properly on the deliverable and who they are, and they're not paying, it's because he's not delivering what he said he would. It's either one or the other."

Selecting the right clients and making sure they understand what they're getting can make a world of difference. Davis recommends that before starting a project you should know all of the following:

1. Is the potential customer a bona-fide client? (Can they and are they willing to pay? Do they have a legitimate need to commission a servicce order?)

2. Have you properly defined the deliverable, and has the client reviewed and agreed to the plan? Has the client seen and signed off on samples of your work? Are you sure they know what they are getting and have agreed to it?

3. Are you doing the work properly?

4. Do you have a tight enough contract with the client?

Look at your options to at least cover the cost of the service, leaving the profit portion to be paid at a later date or for that to make up the second or third payment.

Keep in mind, the advice of this bureau is to add automatic draft for multiple payments. More and more businesses are accepting automatic payments for balances due on products or services. Sweeten the deal and inform the client that there will be no additional processing charges for each remaining payment if funds are available as expected.

Make collecting payments work for you, easier on you and your staff.

Social Network Fatigue; A Small Biz Investment?

Lets get right to the point, don't waste valuable time blogging when you should be working. How cut and dry was that? Social networking has evolved into much more than anyone could have ever truly imagined, I'm certain. However, there have been some great successes.

What we find at the Corporations Bureau are many new business owners discussing the amount of time they are investing online to establish and develop leads for their business. Now on the surface, that sounds wonderfully efficient, but if we delve a bit deeper into the online research time, we then will find that there are a few key indicators that may help you spend your time more wisely.

While advising a client the other day I discovered that he was having a difficult time researching and developing leads and was growing more and more frustrated with his apprarent lack of success or time payoff. I want you to know that, the the type of business you operate will make a huge difference and play a major role in how much attention or payoff you get from a social network.

If you run a lawn business, a hair salon, or a small commercial print business, it doensn't mean you can't utilize online resources, yet, Facebook and Myspace may not truly be in your best interest. LinkedIn my suit your needs best. Once you create our LinkedIn account, visit our account (See link below) so that we can "recommend" you to other users that are Linked to us.

Chris Williams at the Register wrote this article recently regarding "Facebook fatigue". He quotes some data showing a slow down in traffic to the dominant social network website, and says people are "just, well, bored of social networks". I'll let you read the article and make up your own minds as to what points he is making but, I would like to respond in 3 areas..

That we are currently in a bubble that is going to burst and go badly for social networks. That widgets are only making money from other widget developers
Facebooks valuation was hugely over the top.

Lets start with the talk of a bubble. Average people are definately tired/bored of the talk of "web 2.0", and when I say average I mean non web developers. And to the layman I'm sure it does look that we are in another bubble similar to the late 90's. But I dissagree, for a few simple reasons.

A lot of people got "burnt" in the last internet bust, and I really don't see them making the same mistake twice, secondly while there is definately a lot of interest in "web 2.0" and a lot of people are investing large sums of money, they are usually investing that money in actual technology, not airy fairy idea's of what COULD happen (which is what happened in the late 90's, lots of good idea's but the technology wasn't there). I think those 2 reasons alone mean there won't be another collapse. The western economies as a whole are slowing down, yes, but thats not due to web 2.0!

Next widgets. Widgets/apps are the future of the internet. I think its only a matter of time before you won't be going to www.facebook.com but instead you will be firing up your social desktop app where you have all of the social networks you are on as little icons, which you just click on to see what's happening in each one, the point here is that widgets or apps are just a new layer of technology that is going to be used to make socialising online easier. OpenID is going to be used with these to splinter the larger communities into smaller niche based "groups". So looking at widgets or apps in purely a commercial fashion right now I think is a mistake, they are infact just the newest extension of web 2.0 technology.

Lastly Facebooks valuation was over the top ? Well if FB convert their members into shoppers (for products or services) then its not. The launch of the API could be seen as a clever way to get 3rd party developers to do that "conversion" process for them. And it appears to be working with the launch of a very successful platform.

Overall to suggest that social networks are going to go away I think is wrong, for lots of obvious reasons, but one word explains that more then any other, and thats community. Social networks are just communities of people with similar interests. These have always been around! However with the internet, it's easier for these communities to form (eventually touching on every subject you can think of). Social networks are the future of the internet, and widgets are the future of social networks.

As this pertains to your business and your strategy for new development, sometimes, social networks can become extremely tiring to the point of wearing you down from the constant back and forth. Invest your time, but the key word there is "invest". Only invest what you are sure to recoup. Otherwise, it just become a great loss for you and your new small business.

Plenty of Water still in the Wells over @ Fargo!

As other major players fell away, Wells Fargo has remained a stalwart, increasing its lending this year through SBA programs.

The landscape of lenders willing to work with small business owners has changed dramatically in the last year, but one bank -- Wells Fargo -- has emerged stronger than ever.

While other financiers that were historically major players took a knee, Wells Fargo (WFC, Fortune 500) increased its lending, emerging as the new number-one lender through the Small Business Administration's loan programs.

CIT Group (CIT, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Banco Popular of North America and others that once held top spots have cut their SBA lending by more than 70% this year. Meanwhile, Wells Fargo upped its loan volume 4%, from $583.4 million in 2008 to $605 million this year.

Some of that gain may be fueled by Wells Fargo's late-2008 acquisition of Wachovia, another bank that traditionally made many SBA-backed small business loans. The acquisition closed three months into the 2009 fiscal year (which the SBA began Oct. 1), leading Wachovia and Wells Fargo to report their loans separately through part of the year.

Taken together, the two banks lent $742.3 million this year -- down 24% from what they collectively lent as independent banks last year, but still far more than any other bank put into the small business market. The next runner-up, U.S. Bank (USB, Fortune 500), made $249.5 million in loans through the SBA's flagship lending program.

Given the retraction of a number of key lenders, Wells Fargo's leap to the top is not a major surprise. "I don't see anything shocking with Wells Fargo being number one," says Bob Coleman, editor of the Coleman Report, which monitors small business lending trends.

What Wells Fargo did right: Wells Fargo's ascendance isn't solely due to its competition's collapse. The bank made two key strategic decisions that turned into major advantages.

First, Wells Fargo doesn't resell its loans on the secondary market, where many banks unload bundles of the SBA-backed loans that they've made. That market froze last fall after Lehman Brothers' collapse, leaving many banks unable to find buyers for their loans -- and without those sales, the banks lacked the capital to make new small business loans.

Second, Wells Fargo focuses on making traditional 7(a) loans, which can total as much as $2 million each. The Small Business Administration guarantees a portion of its 7(a) loans -- if the business owner defaults, the government pays the bank back for the insured portion.

But the SBA also offers a variety of "Express" loan programs, which involve lower loan amounts, lower government guarantees, and less paperwork. Because banks scrutinize those loans less, they're more prone to go bad when the economy gets rough.

Bank of America (BAC, Fortune 500), in particular, has been hit hard on that front. The bank made 3,296 SBA loans last year, making it the fourth most-active SBA lender based on the number of loans made. But most of those loans were Express loans, with an average loan size of just over $31,000 each.

And many have begun defaulting. A year ago, CEO Ken Lewis called his bank's small business loan portfolio a "damn disaster." Bank of America reacted by sharply pulling back on its SBA lending. So far this year, the bank has made just 303 loans, 269 of which were Express loans.

"Wells Fargo is more of a traditional 7(a) lender. Their loans are larger and there is collateral behind them," says industry observer Coleman. "They do a more extensive underwriting analysis than the SBA Express lenders, which makes them feel more comfortable in assuming risk. For some lenders, the model is broken for those smaller Express markets, and so they have backed out of the market."

The new lending scene: Tom Burke, Wells Fargo's senior vice president of SBA lending, sees his bank's new leading role on the lending scene as a validation of what it has been doing all along. While Wells Fargo never before held the number-one spot, it has routinely been in the top two or three.

"We have been consistent. Our portfolio performs consistently," Burke says. "We always said that we are a player in the market. It is part of our DNA to help our small business customers."

Wells Fargo plans to press its advantage. "We are increasing staff to take advantage of gaps in the marketplace," Burke says. "We saw weakness in our competitors, and we decided to take advantage of what was going on in the marketplace."

One new small business owner is grateful that Wells Fargo is still actively lending. Jennifer Braun obtained an SBA loan from Wells Fargo in June to purchase a five-year old event-planning business called Festivities. Located in Medina, Minn., just outside of Minneapolis, the small business has seven fulltime staffers and a handful of part-timers who work weekends to cover events.

Previously employed at an event-planning firm, Braun knew it was risky to change careers in a recession: "All along, I kept thinking this is the worst time to quit my high-paying corporate job, as the primary breadwinner in our house."

But her doubts didn't stop her from following her instincts. "I just kept having the gut [feeling] that this was the time to act," she says. "You see a trend in downturns that a lot of companies are looking for mergers or consolidations, and that just seemed like something that I needed to capture -- to get a great business at a great price, because everyone is so scared, they are not moving forward on it."

Braun started her research by Googling "How do I get a business loan?" and ended up being directed to Wells Fargo by a broker. Both Braun and her husband quit their jobs and currently devote all of their energy to growing Festivities. She's optimistic that the economy is on the rebound: "I have had a strong belief in next year," she says.

Investing In Yourself First!

With times as they are, it is now your time to invest in you! Become your own lender, financial resource and payment stream. How biased is that? Pretty darn! However, the Corporations Bureau simply asks that you require the same of yourself as you would from any other finance stream.

What does that look like?

Repay Yourself First: Most financial experts and money managers would all agree on Rule #1...Pay yourself first. One of the benefits of being your own disciplined lender is that you know when you are going to be repaid. Be as committed to your repayment as you would to be repaying any other lender.

Seek Experienced Lending: Look for an experienced Small Business Lender who can meet your organization's needs and expectations from either local or state levels. Sometimes, staying "close to home" finances benefit you as you build local relationships that will continue to flourish along with your success.

The Box: Clear and Simple, get out of it with your financial thinking. Everything you knew traditionally regarding lending, business loans and corporate business plans are no longer valid. That is your box.

Now let me tell you what's outside of that box- Non-traditional loans and lending organizations, your local City Commissioners, City Council and Town Hall members usually have small business funds they MUST use each quarter/year to distribute. Contact me to find out if your city is one of them, but we have worked closely with Miami-Dade County Board of Commissioners on several opportunities to get funds to small businesses.

Be The Relationship: As a new entrepreneur and small business owner, everyone you meet is a new relationship and financial resource. The hand you shake may the hand you hold later. In that same arena, don't get caught up in the online loan process. You are just another IP address attached to a lending URL address. Don't be yet another link, so do all that you can to expand your opportunities by getting in the face of your lender. You lose your "wiggle-room" online, because there is no face attached to the 'username.

Spend time looking at the benefits as well as the pitfalls of becoming your own lender, however, prop yourself up to empower your own success...Your time is now!