"The question isn’t who is going to let me... the question is who is going to stop me."
- Ayn Rand
There is an old joke told by former stand-up comedian (and now movie star, writer, and musician), Steve Martin.
The joke went something like this:
"I am going to tell you how you can make a million dollars in two easy steps...
First step... get a million dollars... "
Now this might seem funny to most people... but in reality... this is truly how the wealthy got wealthy in the first place...
Simply put... it takes money to make money!
Now you might have a great idea or opportunity... an idea that could change the world... an opportunity that is a sure-fire way to create a significant profit... but if you are unable to act upon the idea due to a lack of capital... then the idea is dead.
This is exactly what happened to me a few years ago...
In 2004, I needed a new home for my growing business. I wanted to purchase a commercial building instead of paying rent to a landlord.
Unfortunately, this was a period of time when virtually no commercial buildings were available to purchase in the area I wanted to be.
Now there were plenty of empty buildings to lease... so many in fact that there was a real glut of space available in the market and landlords were hungry to find tenets for their empty spaces.
It was because of the market circumstances that I was able to find an owner willing to lease me space and give me a two-year purchase option at a price about 15% higher than the current market pricing (that is if you could even find a building for sale)... the only caveat was that the option exercise window was only for a 30-day period at the end of the 2-year option.
As it so happens, because of a bubble, at the end of the 2 years, the building had appreciated some 40%.
The building was worth significantly more than my option price... which was a windfall for me...
I didn’t have the money to buy the building... and I only had 30 days in which to raise the money before the option expired... here was a great opportunity... but I didn’t have the capital to make it a reality...
With hat-in-hand, I approached every bank in town to help me with my plight... but my business was still fledgling... and I had used all my available personal credit resources to sustain my growing business... so I was unable to secure a bank loan... even for this no-lose proposition.
Finally in the 11th hour, I managed to scrape together a consortium of "friends and family" to lend me the needed sum to purchase the building... albeit at a hefty borrowing cost in terms of money and loss of pride.
The moral of the story is this...
There are plenty of opportunities out there... but It truly takes money to make money... and that’s why those who have money (or access to get it) get richer... while the rest of us try to scrape by...
This is the way it’s always been...
Well... that is until most recently...
Today there are two different movements afoot that have the potential to help fund entrepreneurial activities.
The first is called micro-financing.
Micro-financing is the practice of institutions and individuals making small loans and providing financial services to a small group of people with an idea and the skills to start a business enterprise.
This could be for a family in Southeast Asia to purchase a small plot of land to raise additional crops that they can sell in the marketplace... to allow a village in East Africa purchase raw materials to make hand-made tribal jewelry or baskets... or to allow saffron farmers in Morocco to create a cooperative, bypassing the spice traders who keep up to 85% of the profits for themselves.
One component of microfinance is small loans (typically $50 to $5,000) that are made to a group of borrowers who have no credit or source of collateral. The borrowers use this seed money to start their enterprises and often work hard to repay the loans within the term. Repayment rate of these micro-loans is as high as 98% and has changed the lives of some of the poorest people on the planet.
The second component of microfinance is the ability of people to keep their money in a safe place without the worry of others who might misappropriate their new-found "wealth".
We take for granted the security of the banking system available to most people of developed countries. To those living in undeveloped nations, there are little or no provisions for the safe-keeping of assets. Micro-financing gives the poor and "near-poor" access to financial services such as safe savings, insurance, and fund-transfers.
Micro-financing has helped thousands of poor people raise their standard of living and create opportunities for those where opportunity was simply not available to them.
While micro-finance if good for the world’s poorest, there is a different source of capital for those with larger opportunities.
"Crowd-sourcing" is a relatively new technique for individuals and companies to raise capital needed to fund a new company, project or venture or to assist an on-going concern with providing growth capital for their existing business.
With the advent of the Internet and social media, the vehicle now exists to reach out to millions of potential investors or lenders who are willing to risk a small amount of money in a potential project or company.
There are now several different crowd-sourcing websites, such as Kickstarter, Indiegogo, and Crowdfunder, which allow the entrepreneur to describe their project in great detail to a community of investors who may be willing to make a small investment (or in some cases... a donation) to a worthy project or cause.
The idea behind crowd-sourcing is that it is much easier to find a million people to invest / lend / donate $1 than it is to find one person or company to invest / lend / donate $1 million.
Many times the individual investor has no intention of ever seeing a profit for their investment but rather would like to use their money as a donation to a worthy cause or art-related creative project.
The world of finance is rapidly changing...
The ability to access capital is now readily available to most people... those people with great ideas... those people who are willing to work hard... those people who simply need a hand-up rather than a hand-out...
It is still a matter of fact that the world is the place where the rich will continue to get richer... but it is also the place where the "not-so-rich" can find opportunities to better themselves and enrich their lives as well...
Thank you very much for your support of OptiFuse where we believe that you’re always worth a million...
Email - email@example.com
Twitter - @OptiFuse
Website - www.optifuse.com
Blog - www.optifuse.blogspot.com