Mission # 3-6 Bringing High Tech to Your Business

Objectives:

• To ascertain the technology needs of your business
• To explore how the leaders in your industry are using technology
• To move the decimal point in your mind
• To purchase a good or great domain name

Background:

Today, it would be difficult to think of any business not embracing the latest technology. The world is going wireless. Put your business in front and reap the benefits. You should immediately put into your business plan, a commitment to high tech.

Your high tech tools will include but not be limited to: desktop computer system with printer/scanner/fax, laptop computer, personal digital assistance (PDA), Blackberry, digital camera, portable flash drives, iPod and cell phone.

The military is all about high tech. So you're fortunate in not being intimidated by high tech. You know that you don't need to know the tech of high tech. It is no more important to know how a Blackberry retrieves email than how an LED flat panel TV retrieves signals from a satellite.

Since research is essential to the success of your business, to receive the full benefit of the web, you must have high speed Internet access. If you can order a broadband connection through cable access or DSL, get it.

In the excitement of equipping a new business, you must guard against overextending your budget. You must rely on your research to tell you where you can save and where you should splurge.

For most businesses, industry specific (vertical) software is available. Your research will tell you how important vertical software is to your industry. If you're an architect or engineer, a powerful computer system and vertical software are mandatory. However, if you're a florist, it might be just a nice luxury to have software that was developed specifically for florists. You don't want to spend $500 for a vertical software program if you can do the same tasks with a more flexible non-industry specific software program that costs under a hundred dollars. Research. Ask.

Most small businesses can be managed with off-the-shelf, user friendly software programs such as Microsoft Office. You can track your inventory. You can handle your scheduling. You can do all your bookkeeping. You can project yourself to richness. If you devote an hour a day to your new programs, in most cases, you can expect to be sailing through tasks like a pro in two to three weeks. Today, most programs come with online tutorial programs.

Your Website

Websites are no longer an option. You need a good interactive site. Now, and in the years ahead, your website will be your information link to your customers, your vendors and others in your industry. Remember Rule #3, Copy Success. Find the people who are doing what you want to do and do what they are doing. Study the technology being used by your industry leaders and do what they are doing.

Also, study your competition. If they offer online catalog sales, so should you. As you build visitor traffic, you can turn your website into a moneymaker through affiliate programs and by accepting online advertising. Companies like Google and Yahoo make accepting online ads easy.

Go for the best domain name you can afford. If you are a local business and intend to stay local, you need a good name. If you are an online retailer, you need a great .com name. If the name you are looking for has been taken but isn't being used, then try the online "WhoIs" function at Network Solutions or GoDaddy to find the domain owner and make an offer to purchase. Also, find a variation of your own name that you can register with a .com. Search for .com names only.

New Technologies

Can you start an online forum on your website for your customers to communicate with you? Sure, why not? Can you use this forum for your personal blogging? Sure, why not?

Can you start your own radio or television station on your website? Can you offer the world an audio or video podcast? Can you post how-to video on YouTube?

High tech always has and will continue to revolutionize business. Your customers are becoming more and more sophisticated and you have to there with the digitized information that they want. Do they want to email you a question from their Blackberry to your Blackberry, be ready or be sorry.

Story:

Andy Martin, Investor

Activities at Taylor Realty hummed along smoothly for the next six months with one exception, Don was spending less and less time in the office. No one seemed to notice or comment on Don's absence except Andy who started to miss having his mentor around to advise him on his pending transactions. Andy's inquiry into Don's well being was about to impact his career.

Mr. Taylor's news wasn't that good. Mr. Taylor hesitated a moment and then decided that Andy had matured enough to show empathy to someone else's situation, "Andy, I don't know how much you know about Don's personal situation. Don isn't one to bring his troubles to the office. But, let me tell you this much. Don has three children: two grown sons who are out of the house and an eighteen-year-old daughter, Susan. Susan is severely handicapped. When she was four, she was hit by a car and suffered head and back injuries. She is very lucky to be alive.

"Besides being a quadriplegic, Susan's mental capabilities were severely impaired by the accident. Years ago, the doctors recommended that Susan be institutionalized but Don and Jane, his wife, wouldn't hear of it. They've been taking care of Susan at home for all these years. Now Jane is very sick and Don has been at home taking care of both of them. That's it."

Of course, Andy knew bits and pieces of Don's story, "Gee, this is terrible. I knew Don had a handicapped daughter at home but I really had no idea things were this serious. Is there anything that I can do?"

Mr. Taylor felt better of Andy for even asking, "Well, Andy, we both know Don and Don isn't about to ask for our help but we can both do something, if you like. Don has four deals on the table now. I suggest that you and I tell Don not to worry and that we're going to follow through on these deals for him."

Saint Augustine said, "I can't help everybody but I can help those whom God has place right before me." This is the warrior spirit. No one has to ask twice, without complaint, I will volunteer.

Andy was sincerely interested in helping. "Certainly, Mr. Taylor, we can do that. I'll keep the clients that he has on ISP happy also. And, if any of his clients have new business to do, Don can count on me to handle that also."

Mr. Taylor, remembering the old Andy, cautioned, "Now, Andy, don't be volunteering for any of this work if you expect a commission split. These deals are Don's, and I know that Don needs the money."

Being a warrior salesman, Andy wasn't insulted easily, "Mr. Taylor, I assure you that my scheming days are behind me. I owe Don. I owe Don a lot. I'm glad I can do something for him."

Mr. Taylor stood up and patted Andy's shoulder, "Well, Andy, that's what I'd hoped you'd say."

Mr. Taylor and Andy did help Don a lot. Two of Don's deals went according to plan but one got very complicated and time consuming and another fell through and was revived twice. But, for the eight weeks it took for Don's personal situation to stabilize, he was able to stay at home and relay instructions to Andy at the office.

Upon his return to office work, Don seemed genuinely grateful to Mr. Taylor and Andy. "I can't thank you guys enough for your help" Don said. "Jane is much better. We've decided that, for now anyway, Susan really needs nursing home care and I'm satisfied that we've found a good full time care facility for her. It's in Edgeton so it's close enough for her mother to visit everyday. I hated doing this but, hey, thanks again."

"It's all right, Don."

"Don't mention it, Don."

Who makes the big deals? Only people working on big deals make big deals. Expand your thinking. Step up!

Don changed the tough subject, "Andy, while I was away, I had some time to think and I might have some ideas for you and me. We can work on them together if you'd be interested?"

Andy was all ears. "Yes, Don I would be interested. Just tell me when, Don."

Don seemed interested in getting right back to business with full steam ahead, "What about tonight? We'll meet after work and have dinner? Jane will be out working tonight on fund raising for the Head and Spinal Cord Injury Association. You're the you're the young man about town, where do you suggest we go?"

Andy may have changed but he was still going to be easy prey for some ribbing. "Don, as far as I'm concerned, we can order a pizza from Romano's and have our meeting right here."

Don was surprised. Maybe, the pretensions of Andy really were going to be a thing of the past, "Andy, you, pizza from a box? I guess you are changing."

Andy laughed. "Please, Don, I'm trying hard to be a better person, so don't rub it in."

Over pizza, Don lays out the tentative outline of his plan with Andy. "Andy, your idea of doing the Annual Portfolio Review for investors as a spin-off to the newsletters may be about to pay off big. Let me fill you in. Last week, I did a Portfolio Review for Mark Stevens, one of my developers. I introduced you to Joe at one of the Roundtable meetings. Anyway, in talking to Joe, he mentioned that he might be willing to sell the Riverdale Shopping Center."

Riverdale was a beautiful center, which many investors would covet. Andy narrowed his eyes in concentration and nodded approval. "Gee, that would be a great listing, Don. Have you got a buyer in mind?"

Don looked right into Andy's eyes and firmly said, "Yes, I have. I think that you should buy it, Andy."

Andy really thought that Don was joking. This type of investment was for multi-millionaires or corporate clients, "Me? You're kidding; I haven't got that kind of money, Don. How much is Stevens looking for? Whatever it is, it's out of my league."

Don made a playful motion as if to hit Andy on the head for having to tell him something that he should have well known, "Listen, Andy, listen. How many times have Jim and I told you to listen? Half the time, if you just keep quiet and listen, the other party will solve the problem for you. Now, let me give you the basics, Andy. The center is 20,000 square feet and, as you know, is anchored by King Brothers' Supermarket. The second anchor is Walden Drug. The annual gross operating income is $340,000 but I think you could boost this up quite a bit. I think we could put the deal together for

about $2.8 million."

Andy liked the numbers but these were numbers for other people's deals, not his. "$2.8 million. You flatter me, Don, but where am I going to get that kind of money? I've never even brokered a deal of this size before. Now, you think I can buy it?"

Don had a good strategic plan in mind, "Well, Andy, I wouldn't be wasting my time or yours if I didn't think that this was a good deal and that you could handle it. Andy, in every investor's life there will be times when he or she is faced with challenging opportunities. Do you stick with the small safe investments, the status quo, or do you accept the challenge, the risks and rewards, of moving ahead?"

Andy interrupted, "$2.8 million is some challenging leap from what I've been doing, Don. If I screwed up, I'd lose everything."

Don tried to continue, "Then, don't screw up. You are the military man with the guts to volunteer for combat. Compared to that, this? What is the difference between buying a three-family house for $280,000 or a shopping center for $2.8 million? It's..."

Andy answered for him, "It's $2,520,000, Don."

Don stated a philosophical concept known and used by many wealthy investors. "Andy, what it is, is being able to move the decimal point in your mind. That's what it is. Move the decimal point in your mind from $280,000 to $2.8 million. You can make a good or a bad investment at $280,000. You can make a good or a bad investment at $2.8 million. The mechanics of the deal are basically the same. Working the numbers is the same. Getting the financing is the same. Managing the property is the same. The difference is the decimal point in the price and in the profits. Are you ready to do it?"

Andy still figured that what he wanted and what he could afford were far apart. "How, Don? How? Yes, I'd love to be involved in a deal like this but how could I ever do it? Maybe in a couple of years but..."

Is there ever a good time to face enemy fire? To risk everything? It would be so easy to retreat but you don't. Sometimes, you just have to have confidence in your training and go for it.

Now, it was Don's turn to interrupt Andy. "Andy, I repeat, are you ready to do it? The opportunity is here now. With the right management, with the right tenant mix, with the rents raised to market level, the Riverdale Center can be worth $3.5 million inside of two years. Somebody is going to buy Riverdale. Are you ready to be that somebody, Andy?"

Andy was ready to bow to the advice of Don. "Yes, all right, I'm ready, Don. Now, just tell me how."

Don outlined the strategy, "A limited partnership syndication with you as both a limited partner and also the general partner. In a limited partnership syndication, usually the limited partners provide the downpayment capital and the general partner contributes the organizational expertise. The cash flow, amortization and eventually sale proceeds are split in an agreed manner between the limited and general partners.

"I propose," Don said continuing, "that you raise $800,000 through an offering of 40 shares at $20,000 each which would give you $600,000 as your downpayment and $200,000 to cover transaction costs and for a modest initial operating fund. I would go for a $2 million mortgage and a $200,000 construction loan to upgrade the center. The center could use a new facade and new signage and re-lining the parking lot. It needs some landscaping, etc."

Andy wanted to know, "Can you and I find these limited partners?"

Don didn't seem to feel that selling the partnership interests would be that big a deal. "Andy, that will be the easy part. Remember, this is an excellent deal we're talking about. How many investors do you know who want to invest in real estate but are afraid of the management and liability?"

 "Plenty."

"That's right, Andy. We both have a database full of them. Well, here's an opportunity for them. In a limited partnership syndication, you, as the general partner, supply the management and the limited partners' liability is limited to their cash investment - a good deal for everybody. Listen, all the big stock brokerage firms, Paine Webber, EF Button, Merrill Lynch, all of them, have been doing real estate limited partnership syndications for years. And, for years, these big stock brokerage firms have been taking huge upfront fees for organizing them. Our limited partners won't have to pay most of these fees. Really, Andy, here is your challenge to move that decimal point in your mind. This Riverside deal is small time in comparison to the stock brokerage deals. And, as further proof to the limited partners that this deal is solid, I think that you should buy the first ten limited partnership shares."

"Ten shares, that's $200,000, Don."

"You've got more than that in equity, Andy."

"Yes, Don, but not all in cash."

"Well, Andy, then, we'll make cash. How about selling Salem End and refinancing your three-family?"

"Geez, Don. I guess I'd have the money then but I'd really be leveraged out."

Don felt that Andy was ready for the push to go from average to exceptional. "Andy, where were you two years ago? Are you ready for this, Andy? Yes, you'd be leveraged out but you'd have the three-family and a significant interest in one of the best shopping centers in the area. Or, as I've heard you say so often, 'You can just sit there and do crossword puzzles.' Have you got it, Andy?"

"You'll help me, Don?"

Don wasn't blinking, "Of course. I already have a good buyer in mind for Salem End. I'll help you do the prospectus for the limited partners and the bank. And, I'll get you started managing the center."

Options were whirling in Andy's mind, "Don, could I do the deal just being the general partner? That way I could keep Salem End and the three family."

Don had already thought about the sales approach that he and Andy would use with prospects,

"You could, but I'd rather see you as a limited partner also. It will give the other limited partners a lot more confidence for this deal and the deals to come."

After showing him a whole new world of potential profit, Andy wanted to make sure that Don was fairly compensated, "Don, you don't want in on this deal?"

But, Don had already arranged fair financial settlement for the various components of the deals. "Andy, I think that you're aware of my home situation. I'm setting up a trust fund for the care of my daughter and I need cash more than equity. I've already gone over the deal with Jim Taylor. He's agreed to a $75,000 commission on the center and a $20,000 commission on Salem End."

Andy was surprised to find out how far Don had already gone with the deal. "You've already discussed Salem End with Jim?"

"And, with the Salem End buyer, yes."

"You knew I'd go for the deal?"

Don nodded his head, "I know it's a good deal. We think you're ready for it. Now, do you know that you're ready for it?"

With a determined look, Andy held out his hand to shake hands in agreement, "OK, Don, let's put it together."

Over the course of the next year, Taylor Realty Partners One purchased the Riverdale Shopping Center from Mark Stevens. Andy and Don are currently raising $2.5 million in operating capital to fund Taylor Realty Partners Two, to make additional limited partnership syndication purchases of larger investment properties in the Newton area. With most of Andy's time devoted to management and acquisition of the limited partnerships, two new investment property brokers have been hired at Taylor Realty. The investment brokers and the rental/ISP staff work under the supervision of Andy and Don.

Could you be Andy?

Never forget. The business doesn't matter. Your style and attitude matter. Think BIG. Research and question and listen. You deserve to be successful.

Operational Limitations:

• Don't let technology pass you by. You need interactive wireless tools to communicate with your customers.
• Using "aol.com or gmail.com" or similar generic web and email address marks you as an amateur. Buy a strong .com name for your business. This domain will become an important asset to your business. This is brand building.
• If you don't have an up to date website, you don't have much of a business.
• You will only accomplish what you attempt to accomplish. If you want your business to get BIG, you have to think BIG.

Seeds for thought:

• Why should an education in computers be part of every small business owner's plan?
• What skills should you have to be proficient with computers?
• What are the components of a basic business computer system?
• Why should you consider buying used rather than new equipment?
• How much of a dent will a computer system put in a small business budget?
• What is meant by vertical software?
• In helping Don, did Andy prove that he had matured as a businessperson?
• What do you think is meant by an Annual Portfolio Review?
• Can you think of any other ways that Andy could have purchased the Riverdale Shopping Center besides through a limited partnership?
• What types of investors could Don and Andy interest in a limited partnership?

Jargon:

Broadband - telecommunication in which a wide band of frequencies is available to transmit information.

CPU - central processing unit, the brain of the computer.

Domain name – A unique locator for your organization on the Internet.

E-mail - the transfer of correspondence or other documents by means of a cable or telephone line from one computer to another.

Fax - a method of communication linked to the international telephone system.

General partner - in a partnership, a partner whose liability is not limited. All partners in an ordinary partnership are general partners; the managing partner in a limited partnership.

Gross operating income - total monies collected before any expenses.

Hardware - the electronic and mechanical parts of a computer system.

Limited partner - in a limited partnership, a part owner whose liability is limited to the amount invested and whose role in business management is restricted.

Modem - a device which allows a computer to transmit and receive data by means of a communications link, such as a telephone line.

Monitor - TV-like screen for a computer.

Software - the specific programs that allow a computer to function.

Vertical software - industry-specific software.

Questions and Answers:

I run a bookkeeping practice from my home. How can I benefit from a team approach to business?

Even if your business is a one person shop, you don't have to feel alone. Your team is as close as your telephone. Your team will include your lawyer, accountant, vendors, consultants, etc.

If you want to hold a group meeting, well, you can do that too, via a conference call. In not too many years, expect to see video conferencing becoming affordable to small businesses. So working at home in your bathrobe might not be future option. Right now, you can tele-conference from your home computer by using e-mail and the World Wide Web.

It is nice to see your team in person every once in awhile, so why not get the team together for lunch? As a sole proprietor, you certainly want to join your local business and associations to meet with other business leaders.

Could you explain more fully your concept of "getting by giving back"?

Most successful businesses gain consumer loyalty by meeting or exceeding expectations.

It is the sandwich shop which slips a little cookie or piece of candy into a lunch bag. It is the golf pro who doesn't panic if a lesson goes ten or fifteen minutes over. It is a taxi company who once in a while gives a free short ride to a regular customer. Random acts of kindness are noticed and appreciated.

The service station can sponsor a little league team. The florist can send a free centerpiece to the annual scout banquet. The rap band can play a benefit at the high school. The barber shop quartet can sing at the nursing home. The staff from the dental office can all walk for the hungry. The carpenter can build an entry ramp for an elderly handicapped resident. Give and you shall receive.

Isn't a lot of advertising money wasted?

There is an old saying, "Only half of my advertising works, I just don't know which half." A lot of money is wasted by companies advertising in the wrong places. Therefore, you should be sure that you are advertising in the correct medium for your type of business. Should you be using direct mail, flyers, seminars, telephone sales, newspapers, magazines, radio, TV, the Internet, signs, the Yellow Pages, podcasting or a mix? You aren't going to find the answer in any book. You must take the initiative and do your own research. Find out where the leaders in your industry are advertising and do your test marketing in those media.

Test your ads, and when you find a medium and an ad that works, stick with it. Amazingly, many companies will feel the need to change an ad that has been running successfully for weeks or months. Don't. Remember, if it isn't broke, don't fix it!

Action Plan:

• Surf the web and find at least four general websites designs that you like.
• Surf the web and find at least two industry specific website designs that you like.
• Buy a good or great domain name.
• Find an experienced web designer and web master who can put your brand online.
• Make a list of the technology tools that will make your business productive.

Support:

• For information on writing an effective business plan: http://www.bplans.com/
• For A sample business plan template: http://www.ntia.doc.gov/opadhome/mtdpweb/busplano.htm
• From The Center For Business Planning: http://www.businessplans.org/businessplans.html
• From PlanWare, advice on writing a business plan: http://www.planware.org/businessplan.htm

Inspirational Insights: