A scenario to increase my cash flow problems

Originally Posted by Shane

I've got a scenario in mind that I'd like to put in place.


The scenario I have in mind is this:

1) Advertiser may opt for a monthly payment (increased 20% over cash).
2) Payments are debited directly from their bank account. (I've worked for companies who have offered this)
3) Investor pays me cash payment minus the 20% increase and takes over the monthly payments deposited into their account by the bank.
4) Any moneys not recouped by investor are refunded by me, up to the amount paid for that account.
5) Investor will have recouped their investment on each account plus 20% at the end of the 12 month term.

This scenario gives me the cash I need for fulfillment, commissions, and profits.
It gives the advertiser an easy way to participate and access to a very lucrative audience.
It gives the investor a high return on their investment with little to no risk.

I'll use a simple example to see how the numbers would work and will base it on $100 to make them easy...

1) You sell $100 product for cash but charge the advertiser $120 to be on the payment plan.

2) As an investor, I give you $100 now for an income stream that will total $120 in 12 months (ex. $10/month)

3) Lets say then in 6 months they stop paying so I've only received $60

4) Therefore, you are going to refund the difference up to the amount paid for that account which would be $40 ($100 - $60)

If that is what you have in mind (maybe it isn't, see below) then it isn't very attractive to an investor that understands it. The investor assumes a lot of risk and only gets rewarded in month 11 & 12 if it makes it that far. It is reasonable to assume that some will reach term and other won't so the real ROI isn't 20%. 20% is the best case.

Maybe this is what you have in mind for my steps 3 & 4 above:

3b) Lets say then in 6 months they stop paying so I've only received $60

4b) Therefore, since the income stream only went to 50% of the term (resulting in payments of $60 ... $50 principle and $10 interest), you are going to refund the remaining principle of $50 ($100 - $50). This means the investor received a $10 profit for the use of the money over the 6 month period.

If you are offering the "b" senerio I outlined then you might be able to find an investor and the cash flow you need. You still will have a lot of selling to do to convince them that you can be trusted to make good on the refunds if needed.

To find investors you could start attending local REIA meetings (Real Estate Investment Associations). You can network with many individuals that would be familar with buying notes. This is very similar in concept.