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  #1  
Old October 10, 2007, 03:56 PM
Shane
 
Posts: n/a
Default A scenario to increase my cash flow problems

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

A little background:

I've got an ongoing business (since spring) selling captured audience advertising, mostly to the restaurant and recreational industries. By "captured audience", I mean people who WILL be taking advantage of these establishments.

Each location accommodated 5 or 6 advertisers, generating between $1500 and $2000, with initial fulfillment costs of about 10 to 15 percent.

Generating the advertisers is a no-brainer. My presentation takes about 60 seconds, and because of the fact that most have partners they have to discuss expenditures with a partner, it takes two or three visits to get a yes or no answer.

I've done five of these so far.

I've recently been working in a small touristy type city, grouping 6 locations together and selling ads for all six for between $1090 and $1890. The problem is that the tourist season is over and most prospective advertisers have already spent their annual advertising budget. Not to say that I haven't been able to do it, (only got one space left to go) but it has been time consuming.

I've also racked up (count them) 12 prospective advertisers who would love to do it, but can't because of their depleted ad budget, but "definitely give me a call next spring".

OK, enough background.

To the point: I'd like to be able to offer monthly payment. (I don't need lectures about the risks involved, I'm quite confident in the advertiser's desire to continue for a prolonged period of time. If they stop paying they're out.)

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.

Now I know that there are investment groups out there that buy accounts receivables from businesses. So, I know that this is feasible. But I don't know how to go about it. Any Ideas?

(Oh, and by the way, my own credit sucks. No jobs in Michigan, that's how I got started in this in the first place.)
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  #2  
Old October 10, 2007, 10:33 PM
Bozo
 
Posts: n/a
Default Re: A scenario to increase my cash flow problems

Quote:
Originally Posted by Shane View Post
5) Investor will have recouped their investment on each account plus 20% at the end of the 12 month term.

That would work if you could find an investor willing to settle for 20% a year return. The pros would be charging 15% for 71-80 days, plus a $200 or so fee.


Quote:
Originally Posted by Shane View Post
It gives the investor a high return on their investment with little to no risk.

20% is not high, compared to 77%.

Quote:
Originally Posted by Shane View Post
Now I know that there are investment groups out there that buy accounts receivables from businesses. So, I know that this is feasible. But I don't know how to go about it. Any Ideas?

Search for "accounts Receivable Factors"; like in Joe's post.
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  #3  
Old October 11, 2007, 02:16 AM
Unregistered
 
Posts: n/a
Default Re: A scenario to increase my cash flow problems

Quote:
Originally Posted by Shane View Post
I've got a scenario in mind that I'd like to put in place.

A little background:

I've got an ongoing business (since spring) selling captured audience advertising, mostly to the restaurant and recreational industries. By "captured audience", I mean people who WILL be taking advantage of these establishments.

Each location accommodated 5 or 6 advertisers, generating between $1500 and $2000, with initial fulfillment costs of about 10 to 15 percent.

Generating the advertisers is a no-brainer. My presentation takes about 60 seconds, and because of the fact that most have partners they have to discuss expenditures with a partner, it takes two or three visits to get a yes or no answer.

I've done five of these so far.
++++++++++++++++++++++++++++++++++++++++++++++++++ +++++

Question: What is the "Ad Media" or "Ad Product" you are selling ads in or on?

Comment: My experience has been that if this in an "Advertising" program...similar to placing ads on restaurant menus or Placemats... Advertisers will stop paying after they do not see a swarm of new customers coming to them as a result of your "Ad Program"....so a "monthly payment" won't work (my opinion)

Comment: "Factors" won't be interested in this unless you have an "AitTight Contract with a Clause that allows them to take the advertisers business if they don't make payments. Plus..."Factors" want, pretty much, a "Guaranteed Return"...or...they want a HUGE ROI...otherwise, why bother. These people are NOT "gamblers". They want "sure things"!

So...charge a "yearly or semi-yearly" fee and collect it in 3 payments;
1) 1/3 Deposit on Acceptance
2) 1/3 On Proof
3) 1/3 on Delivery

And...the prospects who told you to "See Me In The Spring"....forget 'em! IF you want to waste your time and visit them "In The Spring"...guess what they will tell you then? Yup. "See me after April 15"! After Tax Day they will tell you..."Whoops! We spent our entire Ad Budget! See me in the fall!" etc.

Don Alm

Last edited by Dien Rice : October 11, 2007 at 02:39 AM. Reason: fixed up quote formatting
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  #4  
Old October 11, 2007, 12:46 PM
Skip Rosell
 
Posts: n/a
Default Re: A scenario to increase my cash flow problems

Quote:
Originally Posted by Unregistered View Post
++++++++++++++++++++++++++++++++++++++++++++++++++ +++++

Question: What is the "Ad Media" or "Ad Product" you are selling ads in or on?

Comment: My experience has been that if this in an "Advertising" program...similar to placing ads on restaurant menus or Placemats... Advertisers will stop paying after they do not see a swarm of new customers coming to them as a result of your "Ad Program"....so a "monthly payment" won't work (my opinion)

Comment: "Factors" won't be interested in this unless you have an "AitTight Contract with a Clause that allows them to take the advertisers business if they don't make payments. Plus..."Factors" want, pretty much, a "Guaranteed Return"...or...they want a HUGE ROI...otherwise, why bother. These people are NOT "gamblers". They want "sure things"!

So...charge a "yearly or semi-yearly" fee and collect it in 3 payments;
1) 1/3 Deposit on Acceptance
2) 1/3 On Proof
3) 1/3 on Delivery

And...the prospects who told you to "See Me In The Spring"....forget 'em! IF you want to waste your time and visit them "In The Spring"...guess what they will tell you then? Yup. "See me after April 15"! After Tax Day they will tell you..."Whoops! We spent our entire Ad Budget! See me in the fall!" etc.

Don Alm

Hi Shane,

Thanks for asking about collecting payments for ads.

Don Alm has given you the best way of collecting on these advertising accounts but I have done one other way that worked on a monthly basis.

I collect one third down, one third on proof and the balance on start of promotion. BUT I have also done it this way. When a business bulks about that agreement I collect one third down and on approval of proof I make a monthly payment plan for the balance. If they pay off the second 1/3 by the time I am ready to print then I will print their ad and continue to collect the balance with monthly payments. That way if I get stuck for the last third I still sold the ad for 2/3's and I am happy. If they have not made payments to total 2/3's by the time I am ready to deliver, I place them in the NEXT printing.

So here is how this works out. If I am doing a town or zip code(s) every 6 months and I have 6 ads for each promo, I collect all the ad money from the ones that are willing to pay before printing the first promo. Let's say that is 3 of the businesses.

I then may have one or two that have paid 2/3's by the time of proof and the last one or two may have to go in the printing in 6 months from now.

Here is the breakdown by money collected. If all pay at $1,500 the promo brings in $9,000. If three pay and two pay two thirds by printing I have collected $6,500 and will collect the rest $2,500 in payments over the next 6 months. Let's say the last one sticks me but wants to go in the next printing. I have collected the down payment from them of $500 so I am stuck for $1,000. If they pay good, if not I have their deposit for my time and effort of making the proof and will not print their ad but continue to collect for the next 6 months until the next printing.

Worst case is I spend 15% of total which equals less then $1,500 and I will make a profit of $5,000 instead of $7,500. In hard to sell areas you some times have to discount the prices to sell the last few spots anyways.

This is just a neat way to make it look like you have given them an easy way to pay but you do not have to discount the ads to get their business. If all make the payments then you got full price for the promo, if not you will only take a small hit to your profits on the promo.

Best of success,

Skip Rosell
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  #5  
Old October 11, 2007, 04:30 PM
Shane
 
Posts: n/a
Default Excuses... Excuses...

...are they legit?

In response:

I'll start with Don first.

Sounded like a lecture to me, Don...but I forgive you. I know you couldn't hold back giving the benefit of your experience and I appreciate your concern.

However...I, myself, have been in sales (generally as a top producer) for over 20 year, with thousands of sales calls under my belt, so I'm pretty confident in my ability to weed out the BS.

As I stated, I've already completed five campaigns but this is the first time I've gotten the excuse of, "my ad budget is already spent". And because of the touristy nature of the town and the fact that the tourist season is now over, this all leads me to believe that this it is a legitimate reason.

In addition, all of the other campaigns I've done have been for individual locations with ads selling for an average of four or five hundred dollars. Big difference when grouping six locations and asking for 1800 bucks. Rationally, they're getting a deal, but while 4 or 5 hundred might be easily absorbed, 1800 is harder to come up with...especially after the prime tourist season is already over.

In other words: I've been there, talked to them, gauged their response, and weighed the outcome.

As for restaurant placemats and the like: These are things I see as having little value to the advertiser and, for the cost, not worth the paper they're printed on. Not to disparage anyone who's thinking about or already doing this...it's just not something I could believe in and, because of that: sell.

I believe in value for value. And if my clients are spending their hard earned money on one of my ads, it had better bring in a justifiable return on that investment. I can honestly say that I can't think of a single better advertising vehicle, dollar for return, for those select client that I target, than what I offer. This is why I'm not terribly concerned about clients failing to make good on their payments. If the occasional client falls off, there are others waiting and willing to replace them.

Next, Bozo:

Thank you for you thoughtful response.

I only used Accounts Receivables Factors as an example to show that something similar is already being done.

A 20% annual return is low "compared" to what a Factor might get. However, it's quite high compared to what the average, and vast majority, of investors are getting.

I just thought that someone might have an idea that I hadn't thought of. Maybe something like those people who buy Land Contracts at a discount (just thought of that one). Anyway, my ads scenario is simply an investment vehicle much like the two above. And, if thought of in those terms, maybe an idea might start to percolate with someone that I could use.

On to Skip:

Thanks for responding, Skip. I'm pretty flexible about how I handle payment tailored to the client. But right now it's just a matter of me and my time.

What I want to do is to streamline the process so that when I start to hire salespeople they'll be able to go through an area quickly (especially touristy areas) no matter the obstacles (like off season). I don't think that short term payments do this. However, I'll keep it in mind for those times when it might come in handy.

Again, Thanks.
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  #6  
Old October 12, 2007, 11:33 AM
Unregistered
 
Posts: n/a
Default Shane....

.....
"In addition, all of the other campaigns I've done have been for individual locations with ads selling for an average of four or five hundred dollars. Big difference when grouping six locations and asking for 1800 bucks. Rationally, they're getting a deal, but while 4 or 5 hundred might be easily absorbed, 1800 is harder to come up with...especially after the prime tourist season is already over."

and....

"I believe in value for value. And if my clients are spending their hard earned money on one of my ads, it had better bring in a justifiable return on that investment. I can honestly say that I can't think of a single better advertising vehicle, dollar for return, for those select client that I target, than what I offer."

Shane....now you've REALLY got my curiosity up. Would you mind sharing where your Ads are going to warrant...$400 or $500 and $1800 if grouped?

Thanks,
Don Alm
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  #7  
Old October 12, 2007, 02:07 PM
Shane
 
Posts: n/a
Default Re: Shane....

Sorry, Don. Not giving it away.

I've already got competitors out there, I don't need more.

However, I will say that it's something that has already been posted on this forum. It's just that I made a bit of an improvement over what everyone else is offering.

How do I know it's an improvement?...because I've replaced two similiar displays which were entrenched in the locations already. The location simply liked mine better.

The point for anyone reading this, is that anyone can create a business, just look around, read these forums, pick your target, and do it.

Which is not to say that it will work the first time. I tried a marketing concept out on oil change places, it showed them how by making incremental (small) increases in four seperate areas of their business, they would increase overall revenues by 30% or more. They all loved it! The problem (at least in Michigan) is that no could afford it (minimum $5000 to get started.)

Yes, I was dissapointed at the time, but then I tried something else and it struck a nerve.
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  #8  
Old October 12, 2007, 11:18 AM
Unregistered
 
Posts: n/a
Default One question Skip...

Skip, you said....
"Here is the breakdown by money collected. If all pay at $1,500 the promo brings in $9,000. If three pay and two pay two thirds by printing I have collected $6,500 and will collect the rest $2,500 in payments over the next 6 months. Let's say the last one sticks me but wants to go in the next printing. I have collected the down payment from them of $500 so I am stuck for $1,000. If they pay good, if not I have their deposit for my time and effort of making the proof and will not print their ad but continue to collect for the next 6 months until the next printing."

Skip...what program is worth $1500 to advertisers? Or did you mention the $1500 just to give an example?

Nowadays....the most I can get on any "Ad" program is $595 from local businesses.

Thanks,
Don Alm
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  #9  
Old October 12, 2007, 11:51 AM
Skip Rosell
 
Posts: n/a
Default Re: One question Skip...

Quote:
Originally Posted by Unregistered View Post
Skip, you said....
"Here is the breakdown by money collected. If all pay at $1,500 the promo brings in $9,000. If three pay and two pay two thirds by printing I have collected $6,500 and will collect the rest $2,500 in payments over the next 6 months. Let's say the last one sticks me but wants to go in the next printing. I have collected the down payment from them of $500 so I am stuck for $1,000. If they pay good, if not I have their deposit for my time and effort of making the proof and will not print their ad but continue to collect for the next 6 months until the next printing."

Skip...what program is worth $1500 to advertisers? Or did you mention the $1500 just to give an example?

Nowadays....the most I can get on any "Ad" program is $595 from local businesses.

Thanks,
Don Alm

Hi Don,

Thanks for asking how to get $1500 for an ad campaign.

First I read the post from Shane wrong, sorry. I thought he was getting $1,500 from each advertiser by lumping together multiple locations. Now that I reread it I see he is getting $1,500 total for each location.

I have done just that in the bowling center advertising. I had two businesses that I sold 6 locations each at $495. I have had many more take 2,3 and 4 locations.

Best of success,

Skip Rosell
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  #10  
Old October 12, 2007, 12:35 PM
Shane
 
Posts: n/a
Default Re: One question Skip...

"First I read the post from Shane wrong, sorry. I thought he was getting $1,500 from each advertiser by lumping together multiple locations. Now that I reread it I see he is getting $1,500 total for each location."

Skip, both are correct.

On individual locations I've pulled in total between $1500 and $2200 for those sites.

When grouping together the six that I have now I'm charging between $1200 and $1800 per ad for all six sites.
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