Shark Tank Success for the Average Entrepreneurs

Posted May 4th, 2015 in Making Money by Jeremy Waller

shark tank

Shark Tank has done an amazing job of making entrepreneurship look easy. Pitch your idea to millionaires and billionaires, get some cash, get some advice and make your own millions. For the handful of entrepreneurs that get to live this story, it’s a dream.

That story creates a false picture though. For every success on the show, there’s dozens that didn’t work out. If you can’t remember just how many products have been pitched, just browse through all of the shark tank products that have appeared on the show over the years.

Even all of this is a fraction of the number of entrepreneurs that apply for the show. Moreover, that group is an even smaller fraction of the total number of entrepreneurs in the world.

Since the average inventor, creator or business owner will never make it in front of the sharks, what options do you have to find the same level of Shark Tank Success?

Why Were Shark Tank Success Stories Successful?

Before we can talk about finding success, we have to define the ingredients for success.

The Sharks have two huge things to offer, mentorship and capital. These are incredibly valuable and, I would argue, contribute far more to the success of the company than the actual product itself.

Having a great product or idea doesn’t mean anything if you can’t finance it and market it. Many entrepreneurs bootstrap it and learn as they go. That’s fine. There’s nothing wrong with that. It’s just going to take a long time and may be difficult to build the momentum you need to really get off the ground.

However, if you can find someone who’s walked the path before to lead you you can shave months or years off the learning curve. Combine this with proper financing and you’ve got the ingredients for success.

So, as an average entrepreneur, how do you find this?

Mentorship Opportunities

Pay attention to the next episode of Shark Tank. You’ll likely see several companies openly admit that they don’t need the money. They need an experienced partner to lead them in the next part of their journey.

You shouldn’t need me to tell you that there are thousands of wildly successful people outside of the 5 sharks. Unless you have a really weird niche, there are people within your own industry that are super successful.

These successful people are potential mentors for you. They exist within every industry. If you don’t know any, then you need to get out and network until you find them. Networking is about far more than making sales, it’s also about making connections that you can learn from.

More often than not, these experienced people are more than willing to help you out, you just have to ask. They’re not going to volunteer on their own.

Sure, it can be scary to ask, but what’s the worst that can happen? They say no? Ok. Move on and ask someone else.

You may be surprised that you get more yesses that you expect. Think about it.

If someone saw you as an expert and asked for your advice, would you be put off or flattered? For most, someone seeking your advice and mentorship is an ego boost.

Opportunities for mentorship exist in any industry.

Finding Capital

Between mentorship and capital, capital is the easiest by far. The path you take is going to depend on your product, your current situation and your goals.

You you have a product focused on consumers, it’s a little quirky, solves a unique need or has a great story, crowdfunding is a great option. Millions has been raised through crowdfunding. On top of that, you can get a great marketing boost as well.

If your product isn’t a fit for the crowdfunding model, there are a wide array of financing methods that are specifically designed for small businesses.

I’m not an advocate of debt; however, I don’t mind some business debt if it’s used wisely. There should be a specific plan for the funds. That plan should generate enough cash flow to repay the loan on time or early and it should generate a positive ROI.

That may seem silly to say, but I’ve seen plenty of companies that see a big bank balance after their loan is funded and do some really stupid things.

For most, a traditional bank loan won’t be an option. Most startups aren’t bankable. It’s nothing personal, you just don’t meet the underwriting criteria. There are, however, asset based lenders, factors and other forms of alternative financing that are specifically designed for small businesses whose financials aren’t in the best of shape.

Shark Tank isn’t a Magic Button

It’s easy to see these Shark Tank success stories and think that you can’t see the same levels of success on your own. You see stories like Scrub Daddy who barely had $100k in sales when they went on the tank to over $18 million less than a year later. That seems impossible on your own.

However, stories like this happen every day. You just never hear about it. There are millions of successful entrepreneurs in the world that got where they are through hard work and knowing how to leverage the right resources.

You don’t need Shark Tank. Hard work and determination leads to success.

When Should You Get Long Term Care Insurance?

Posted December 20th, 2012 in Insurance by Jeremy Waller

I’ve already talked about why you need LTC insurance. Even if you have a modest amount saved for retirement, you could quickly go bankrupt if you end up in a nursing facility. If you look at the statistics for end of life care, it’s startling.

The average private nursing home room will set you back $74k per year. With most people staying 2 to 3 years, you’ll be out of pocket $200k or more.

Fortunately, there is an insurance product designed to offset this risk. Long term care insurance is just like health insurance except that it pays for extended stays in non-emergency medical facilities. For the same reason that you should carry a catastrophic health policy, you should carry long term care insurance.

When to Buy Long Term Care Insurance

The timing of a LTC policy is tricky though. Buy it too early in life and you’ll be paying premiums needlessly for years. Wait too long and premiums will be astronomical at best or you health may preclude you from getting insurance at all at worse.

Most financial experts say you should start considering policies in your mid 50s and should definitely have a policy in place by your 60th birthday.

Before age 60, you have less than a 1% chance of ending up in a nursing home. After this point, you have two things working against you. Premiums rise exponentially as you move past 60. If you wait too long, it probably won’t even make financial sense to get insurance. The other problem is that the chances of contracting serious illness increase significantly as you age, preventing you from even qualifying for LTC insurance.

Evaluating Cost vs. Benefit

The cost of the insurance policy varies greatly depending on when you purchased it. In you mid-fifties, you’ll probably get quotes around the $150 range. Once you hit 60, premiums will run $200 to $250 per month.

Rounding up, let’s say you’re paying $3,000 per year in premiums. Scenario A – you pay yourself $3,000 per year and invest it. Scenario B – you pay $3,000 per year for LTC insurance.

In each scenario we’ll assume you buy coverage at age 60. You then live to the age of 78.2, the average life expectancy in the US. We’ll also assume that you spend the last 2 years of your life in a nursing facility.

Scenario A – Invest It

Just doing a back of the envelope calculation, $3,000 invested annually at 8% for 16 years nets you $119k. That’s enough to say in an average nursing home for 1.5 years, nearly a year less than the average stay. In order for this to work, you would need to live longer than average, stay in a cheaper facility or have your overall stay be less than 1.5 years.

Scenario B – LTC Insurance

This option is pretty straightforward. You pay $3,000 per month and don’t have to worry about needing enough money to cover the cost of a stay in the nursing home.

There are a couple of things to consider here. You come out ahead in scenario A if you live longer than average. You also come out ahead never need nursing care or only need it for a short period of time. At your death, the remaining funds can be passed on to your heirs.

The only problem here is that you are playing the odds. Yes, there’s a chance that you could leave more to your heirs, but there’s also a chance that you could spend the last few years of your life penniless.

Quality of life is a big factor for me personally. I would prefer taking the chance that I would never use the LTC insurance and have the piece of mind that any nursing care I would need is covered.

Have you considered long term care insurance as part of your retirement planning?

 

No LTC Insurance? The Cost Could Be Astronomical

Posted October 7th, 2012 in Insurance by Jeremy Waller


In my last post I talked about the importance of having long term care insurance. Chances are, you’ll need some sort of assistance as you get older. If you don’t have family that is willing and able to help, the cost of care can quickly eat through your retirement savings.

Depending on the type of care you need, your our of pocket costs could be anywhere from nothing to well over $100,000 per year. You may be fortunate in that you never need any significant kind of assistance. But, it’s also quite possible that you will need the care provided by a full time nursing facility.

The costs associated with the different kinds of care providers vary depending on the level of assistance you need.

Best and Worst Case Scenarios

Obviously the best case is that you never need any kind of assistance. But it’s not very prudent to assume that this will be the case though.

Adult Day Care

The next best case is if you have family who is able to help. Even in this case it’s likely that someone isn’t going to be available to help 24/7. That’s where an adult day care comes in. An adult day care can provide the assistance needed when family isn’t available.

An adult day care can run anywhere from $40 to $100 per day. If this is needed on a regular basis, the cost can add up quickly.

Home Health Care

The next option is home health care. This allows you to continue to live in your own home while getting the assistance you need. These caregivers are very flexible and can be available to help full time or just a few hours a week A full-time home health aide will cost around $45,000 per year on average.

Assisted Living

If more assistance is needed, you may end up in an assisted living facility. These facilities are designed to provide assistance with day-to-day tasks, but typically do not provide any significant level of medical care.

On average the cost is on par with a home health aide, but your standard of living will likely be lower. A large unit at a nice facility can be 2 or 3 times more expensive.

Nursing Home

The last option is a full-time nursing facility. These facilities are equipped to those who are bed bound, require more physical assistance than an assisted living facility can provide or have a severe mental illness such as Alzheimers or Dementia.

These facilities are typically charged at a daily rate which works out to $77,000+ per year on average.

The Default Option Isn’t Very Good

If you chose to do nothing you may end up in a bad place – both relationally and physically. There are countless stories of children who have no choice but to care for their parents when they are no longer able to do so one their own.

Many people are ridden with guilt at the thought of putting their parents in a nursing home. The decision is made even more difficult if the parent does not have the financial means to pay for it.

You may think that you can just rely on medicaid to pay for your care. That option is riddled with problems though.

First to qualify for medicaid you have to essentially be at the poverty level. That means you’ll have to sell practically everything you own and those assets will have to be used to pay for care. Only once those resources are exhausted will medicaid pay for care.

Medicaid will also only pay for care in certain facilities – which may be lower than the standard that you would prefer.

The bottom line is, it is imperative that you plan for care as you age. You can plan to pay out of pocket, but you need to ensure that you adequately plan for the worst case scenario. Consider the cost of a nursing home in your area – adjust for inflation – and make sure that your plan for retirement is sufficient to cover that amount.

What is Long Term Care Insurance?

Posted September 16th, 2012 in Uncategorized by Jeremy Waller

Long Term Care Insurance

None of us want to think about a point in our lives where we will be unable to care for ourselves. The reality is, though, that many of us will reach that point at some time in our lives.

If you don’t have long term care insurance, the cost of care can be prohibitively expensive. This leaves the burden on your family.

If your family isn’t able to provide care, then you will be faced with selling everything you own to pay for care out of pocket until you are poor enough to qualify for Medicaid.

Long-term care insurance is a way to offset all of this risk. With LTC insurance, you can have access to care ranging from occasional assistance within your own home to assisted living centers to nursing homes. It can also cover things like adult daycare, hospice and Alzheimer’s facilities.

Some insurance also provides for a live-in caregiver, home therapists, housekeepers and more.

Insurance vs. Out of Pocket

Like I mentioned, the cost of care can be very expensive. Last year, the average annual cost of a nursing home was $77,380, but can be more than double that in some areas of the country.

Unless you have a significant amount of money saved, it’s unlikely that you will be able to pay for this out of pocket.

On the other hand, for a small premium each month you can purchase an insurance plan that will pay a long term care facility up to a certain amount per day.

Premiums very depending on your age the cost of care in your area. If the cost of care is low and you are under age 50, premiums will likely be less than $100 per month. Though, even if you are older and the cost of care in your is high, premiums are unlikely to be over $300 per month.

When Should You Buy LTC Insurance?

The timing on when you should start looking at this insurance is tricky. Buy it too young and you’ll pay thousands in unnecessary premiums. Wait too long and premiums may be too high or you may develop a condition that will prevent you from getting insurance at all.

Most financial advisers recommend that you wait to buy long term care insurance until your mid 50s. This is sort of a sweet spot where premiums are still affordable and it’s unlikely you have developed a condition that prevents you from being insured.

As you get closer to retirement, you should seriously consider long term care insurance. A relatively small premium each month may be all it takes to keep you comfortable in the final years of your life without being a financial burden to those that you love.

Infographic: Employees Keen On Remote Working

Posted August 30th, 2012 in Economics by Jeremy Waller

The concept of remote working is slowly but surely being introduced by more businesses. I’ve been working remotely myself over the past 2 months.

I don’t think I need to tell you that it’s certainly something that employees like since it gives them so much more flexibility to how they approach their jobs.

Employers, meanwhile, can save money by allowing remote working and it can also radically change how they recruit new staff. I believe employers are finally starting to realize that they don’t need to completely control their employees and will have a more productive staff by allowing for some flexibility.

Remote working

Infographic: Rise of the Female Trader

Posted August 28th, 2012 in Investing by Jeremy Waller

CityIndex has put together an infographic showcasing some of the data they’ve recently collected. CityIndex is based in the UK, so the figures are in Pounds, but I thought it was interesting nonetheless.

  • Over the last 10 years the number of female traders has risen by 1000%
  • Occupations of part-time female traders vary wildly, but the most popular are house wives, teachers, secretaries and those working in administration.
  • CityIndex’ most successful female trader is 51 and has profited over £1,200,000.
  • Their youngest active female trader is a 19-year old shop assistant. She has made a total profit of £11,222.
  • A contract teacher earning £32,000 a year has profited over £158,000 with her account

Female Trading Infographic

The Horrors of Being a Landlord

Posted August 15th, 2012 in Real Estate by Jeremy Waller

For 2 1/2 years I worked for a property management company. Going into it, I thought it was a great job. You see, I love real estate as an investment. I had this plan to climb the property ladder and build a portfolio of rental properties.

When the opportunity came up to work for a property management company I thought it would be a great way to my hands dirty learning the ins and outs of managing rental property without the risk of actually owning the property.

I ran the whole show – everything from advertising to tenant screening to rent collection to evictions. It was good way to learn. I had my hands in every part of the process. The downside is, I had to deal with the headaches that came with every part of the proces.

One of the biggest headaches was dealing with evictions and property damage. Those two usually went hand in hand. It’s rare that a tenant that pays their bills damages your property.

I don’t know if they caused damage because they didn’t care or if they were vindictive because we were trying to collect rent.

The worst case was a house we managed in a not-so-nice part of town. The investor bought it for a whole $27,000 and I think he may have overpaid for it…The house was a dump.

There was a tenant in the property when he purchased it, but they only made one rent payment to us. After that it was a 3 month process of chasing them down and finally evicting them.

When I got into the house…holy cow…

It was disgusting.

I think it would have been better if they burned the house down before they left.

I took a step in the door and the carpet started crawling. Roaches literally covered the entire floor. There was a half-eaten, moldy birthday cake on the kitchen table. Animals had been kept in the house and apparently were never let outside.

It took an exterminator 7 trips to get rid of all of the roaches. All of the carpet had to be replaced. There were several places in the sub-floor that had to be replaced because of the urine. The entire house had to be sealed and painted to cover the smell.

At the end of the day, the investor spent nearly $10,000 rehabing the house – more than 1/3 of his initial investment.

That scared me away from real estate for a long time. It seemed like there wasn’t a good way for an investor to protect themselves.

I’ve come to learn that’s completely wrong. There are a number of ways to protect yourself. A situation like that should never have happened.

First, do your due diligence before buying an occupied property. If he would have personally inspected the property, he would have noticed that the interior needed a significant amount of work.

Second, don’t buy a property on the wrong side of town unless you’re willing to be a slum lord. I don’t know about you, but I don’t like fearing for my safety when I visit the property.

Third, consider landlord’s insurance. It’s an insurance policy that covers both accidental and malicious damage caused by tenants.

Having insurance allows you to even out your cash flow. You have a small payment each month, but you won’t have the risk of a large expense due to damage that could kill your profit for the entire year or longer.

Real estate can be a huge risk and a huge headache if not done right; however, if you do your due diligence and offset risk using insurance, it can be a great investment.

How Much Life Insurance Should You Have?

Posted August 3rd, 2012 in Insurance by Jeremy Waller

What would happen to your family’s finances if your died today? Would they be able to pay the bills without your income? If you have someone who is depending in your income to eat, then you need life insurance.

Life insurance is designed to protect your family in the event of an early death. We’re all going to die; the question is when.

Since the purpose of life insurance is to provide for your family after you are gone, you need enough insurance to replace your lost income.

Let me also mention this, there are many different types of life insurance out there. The purpose of life insurance is to pool the risk of an early death. It shouldn’t be used as an investment vehicle (*cough* whole life insurance *cough*). To prove for your family after your death, all you need is a term policy.

The general rule of thumb is to have 10 times your annual income. Many people know this rule and many people use it as a guideline, but most don’t really think about why.

The why is very important. If you don’t understand why, then you can’t make an informed decision. Based on your situation, is 10 times your income enough? It is too much?

The amount of insurance you need depends on the number of years that your income is needed after you are gone.

Let’s Run the Math

If you were to die during the term of your policy, the death benefit would be paid in a lump sum. Now your beneficiaries could just put that money in a bank account, pay their expenses as they normally would out of that account and in approximately 10 years the money would be gone. It could be done that way, but it’s a terrible plan.

Anytime you receive a large lump sum of money and don’t have an immediate need for it, it should be invested. Ideally, an investment ladder would be set up where the funds needed in the next few months would be held in an easily accessible account (likely with a lower rate of return) and funds needed years down the road would be put in a long term investment vehicle (with a higher rate of return).

With a 4% rate of return, the proceeds would last 12.8 years.

With a 6% rate of return, the proceeds would last 15.3 years.

With a 8% rate of return, the proceeds would last 20.3 years.

Now these are conservative estimates. I’ve based this on monthly withdraws equaling your pre-tax income. In reality, your beneficiaries should only need to withdraw your post-tax income – what your take-home pay is.

However, I’ve also excluded inflation to simplify the calculation. In the end, these two factors may cancel out. These numbers are meant to be more of a general guideline.

How Much Life Insurance Should You Have?

Is 10 times your annual income enough? At a minimum, your beneficiaries should be able to achieve a 4% rate of return on the proceeds. Will your children still be at home after 13 years? After they are able to support themselves, can your spouse support their self? If you are a stay-at-home parent, can your spouse afford child-care and other help as needed?

If you are unsure, I would always be on the safe side. Term life insurance is cheap.

Regardless, if you don’t have life insurance now and you have people depending in your income to survive, you need life insurance. Don’t waste time because you’re indecisive. You can always make changes to your policies later.

My Search for Residual Income

Posted May 31st, 2012 in Making Money by Jeremy Waller

residual income

Over the last 5 years I have constantly had a number of side projects to earn an extra income. In most cases it wasn’t much, maybe a couple hundred per month. There have been a few times I did really well and brought in over $1,000 of extra income. Those months were great, but they were always short lived.

Recently, I have been working on a plan to generate a more sustainable residual income stream that doesn’t take a lot of capital up front. I also need something that doesn’t take up a lot of extra time.

Sounds like I need to find a goose that lays golden eggs, right?

I do admit that there aren’t many things that fit those criteria. Most things that generate residual income take a lot of time, a lot of money or both.

I think I may have found something this month that if I do it myself – doesn’t take much time up front – or I can outsource it relatively cheaply.

I think I have stumbled into a market where I can produce a product for either 10 hours of work or $250 (approximately) and then sell that product in a way that should generate $100 of residual income each month. The process can then be repeated over and over.

That’s not a bad ROI. If I decide to outsource, then I should recoup my investment in 2.5 months. Everything after that is profit.

Even if it doesn’t do nearly as well as I think it will, it shouldn’t take longer than 6 months to recoup my costs. That’s still a 100% ROI in the first year.

There is, of course, the possibility that this idea could totally flop and I won’t make a dime. But I’ve looked at it again and again and can’t find any major flaws in my plan.

Nothing is guaranteed, but the strengths and opportunities far outweigh the weaknesses and threats.

…Drum Roll Please…

What is this magical business I’ve stumbled on?

I’m not going to tell you…yet.

I will say that this business has been around for hundreds of years. But, technology over the last few years has changed the business model substantially.

It is now possible for nearly anyone to break into this business and be very successful.

That’s my theory anyways. Over the next few weeks I’m going to test it.

As soon as my first project is done, you’ll be the first to know about it.

Do you do any projects on the side to generate extra income?

Financial Spread Betting Explained

Posted May 27th, 2012 in Investing by Jeremy Waller

For those with an appetite for risk, there are a wide variety of derivatives that you can trade. When traded as a speculative investment, rather than as a hedge, they can be extremely high risk. Just ask JPMorgan Chase who lost well over $2 billion this month from trading naked credit default swaps.

On the other hand, derivatives have tremendous upside potential. But upside potential isn’t everything – the lottery has a great upside as well!

Spread betting is one of the many derivatives that allow you to speculate on the price movement of an underlying security. If you don’t mind the risk, a great way to make an additional income is spread betting.

Now, let me be clear here. You shouldn’t do this with your retirement portfolio. But if you have some extra money to play with, I don’t have a problem with speculative investments – as long as you are okay with the fact that you could lose 100% of your investment.

The Basics of Betting the Spread

Essentially, spread betting is placing a bet on the price movement of a security. Let’s say that Apple is trading at $550. You believe it is oversold and think that the price will rise over the next few weeks. You could use a spread betting firm to bet a certain dollar amount per point. If you buy a stake size of $10 per point then you gain $10 for every point that Apple rises. Conversely, you lose $10 per point that Apple falls.

Say after two weeks, Apple is trading at $575. You could exit your position, taking a profit of  $250 (25 point increase x $10). It works in reverse as well; if you exit your stake when Apple is at $540 your loss would be $200.

How to Manage Risk in Spread Betting

Stop loss orders can be used in spread betting in the same way they can be used when trading equities.

Before you open a new position, you should already know at what price you will take your profits and at what price you will cut your losses. As soon as you get into the position, immediately set your stop loss – allowing some room for price fluctuation, but tight enough that you won’t lose more than you can afford.

As mentioned above, the amount you invest should be a very small percentage of your portfolio. Never use money that you can’t afford to lose. Spread betting offers the potential for high returns, but also has the potential to wipe you out if you don’t effectively manage your risk.