Develop a realistic set of expenses. Look at public companies that are doing similar things, your expenses should fall within a reasonable range of theirs. If ten companies in your industry spend 15% of revenue on marketing, you will have to have a good explanation for why your marketing costs are only 5%. Additionally, in the earliest stages, your G&A expenses are likely to be higher.
Sell assets that are already idle. These may be in the form of old machinery or equipment and it may also be other forms of property. They may be old and may have slowed down the operation of your business, but if they’re still useable, you might as well sell them.
Limit the fundamentals – the Paper Poker Game. The psyche of investors behind Supply and Demand is expressed in price, beyond fundamentals alone. Investors sold off fundamentally sound stocks, after the unfortunate 9-11 incident and it was repeated with the financial pandemic of 2008, going into 2009. Benjamin F. King: Market and Industry Factors; Journal of Business, January 1966: ” Of a stock’s move . 20% is peculiar to the one stock.” A fundamental Analyst fusses with paper (Balance Sheet, Income Statement & Cash flow Statement), only to explain 20% of price behavior. As valid as all the FA work is, would you gamble against the house armed with only 20% of the odds with paperwork done by Analysts?
If you only have staff and not team, you’re working for your staff for free! Staffs are simply reactive people on your payroll that you need to continuously ensure that they do their work, especially when you’re not around. Team are those that work as though they’re working for their own company. You need to build winning teams or you’d end up with losing money.
Once you know the ratio, compare it for parallels with the other companies in the industries and for the market as a whole. Never forget, stocks with a very high p/e ratio can fall dramatically when even the littlest thing goes sour.
To help keep your cash flow examples as accurate as possible you must ensure your customers are fully aware of your invoice terms, keep track and be quick to send out polite request for prompt payment and perhaps charge interest on late payments as long as this is included in your basic terms and conditions. When a new customer appears it is a good investment to do a credit check.
So you have decided to step in to the big leagues and start flipping houses? First be sure to carefully evaluate your personal commitment to the projects, time available to invest into them and willingness to liability exposure. Having bought and sold over 150 houses, I am here to tell you that rehabbing houses is one of the most difficult investing strategies, but can also be one of the most lucrative.