There is one thing we can learn from bankers. Many miss it. You know what it is?
Paper. That is the answer.
Papers called "loan agreements". What's so special with "loan agreements"? Simple, that paper tells the world that the borrower owes the bank $X in total (prinicpal + interest).
Yeah, but that is just banks. You can never do that yourself so why should we learn from banks? Well, open your eyes.
You don't have to be banker to create paper. Legitimate paper.
RE investors who create lease agreements with tenants, do it. Businesses who have customers sign a purchase agreement, do it. Contracts, IOU's you name it. They all have one thing in common. That thing is: They are enormous assets. Worth a lot.
When starting companies I try to have as many customers sign purchase agreements or any other debt notes. Why? To have these papers as my investment in the company I want to create.
If I can't find investors I borrow against those IOU's, contracts and what have you. So what I look at when signing people up on these contracts is credit worthiness. If they don't have credit I will not sign them. And they need to have a stable income of course. Everything the bank wants to see in order to lessen their risk.
When borrowing you only get some percentages of the actual contract value, IOU value etc. But you still get money, and the customer is paying for it. You use your customers as your financiers. Just like a bank would do when they create the cash to lend to their borrowers. That is the lesson.
So, if you don't have cash yourself when starting your business. Find a way to get paper promises from customers and use these papers as collateral at the bank or use them as your "sweet equity" investment against investor capital. Hire a CEO and of you go.
Paper. That is the answer.
Papers called "loan agreements". What's so special with "loan agreements"? Simple, that paper tells the world that the borrower owes the bank $X in total (prinicpal + interest).
Yeah, but that is just banks. You can never do that yourself so why should we learn from banks? Well, open your eyes.
You don't have to be banker to create paper. Legitimate paper.
RE investors who create lease agreements with tenants, do it. Businesses who have customers sign a purchase agreement, do it. Contracts, IOU's you name it. They all have one thing in common. That thing is: They are enormous assets. Worth a lot.
When starting companies I try to have as many customers sign purchase agreements or any other debt notes. Why? To have these papers as my investment in the company I want to create.
If I can't find investors I borrow against those IOU's, contracts and what have you. So what I look at when signing people up on these contracts is credit worthiness. If they don't have credit I will not sign them. And they need to have a stable income of course. Everything the bank wants to see in order to lessen their risk.
When borrowing you only get some percentages of the actual contract value, IOU value etc. But you still get money, and the customer is paying for it. You use your customers as your financiers. Just like a bank would do when they create the cash to lend to their borrowers. That is the lesson.
So, if you don't have cash yourself when starting your business. Find a way to get paper promises from customers and use these papers as collateral at the bank or use them as your "sweet equity" investment against investor capital. Hire a CEO and of you go.
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