|Mark O. Haroldsen’s BLOG|
As I mentioned last week, if you really want a fast rise to the top of your financial mountain, you may want to consider bringing on partners. Partners can give you so much more leverage. Sounds simple, right? Well, there is a bit more to it because there are laws that govern when you seek or solicit other people’s money, rules that were put in place to keep investors and their large investments safe. That’s the first big key item to be aware of when bringing on partners. The second is that you will benefit tremendously from being completely honest as well as understating earnings expectations but I’ll talk more about that in a minute.
What the law says about soliciting other people’s money for your investments varies according to the type of investment. For complex and higher-risk investments, US law requires that the people that you approach must be so-called ‘accredited investors’ or ‘qualified investors’. They need to have a minimum of a million dollars’ net worth (excluding their residence) or have at least $200,000 dollars in annual income (or $300,000 of joint income) each year in the last couple years to qualify. This law helps to insure these investors are in a position to make large investments as well as being people who should have the knowledge to wisely handling their finances.
You are not required to audit your partners to prove their financial standing but if it’s obvious that a potential investor is fudging their numbers, then you need to use common sense and back away from that investor. There are some lower requirements if you raise money by alternative finance means such as crowdfunding (collecting funds in small amounts from a large number of people) but the total amount of money that you can accept is limited. Bottom line here is when you are looking for partners you should only approach those people that you are pretty certain qualify under the rules for your country and state. So know the laws that would govern your dealings with investors.
Now, onto the second key item for super success. This is a pretty simple concept but it’s one that far too many people miss out on. A primary reason this next key item is so important is because it can bring in additional investors without hardly any effort on your part. And all you have to do is be totally upfront and honest with your partners and never over estimate what the financial return to the investor is going to be. If anything, under estimate and try to over deliver. No one minds being surprised that they made more money than they were led to expect they would.
Not long ago, I was looking for a partner to invest in a very secure property that I had found. I was pretty sure I could deliver an 8% annual return on it but I told the investor that I thought the return would be around 7%. So, when I later on delivered an 8% return the investor was so pleased that he told other potential investors about his experience. That is how you get a lot of new investors. It is also the best way to advertise or market your products, if you have any. The thing to remember is that people will more readily trust someone or be ready to buy from them because someone they know and trust referred them.
So if you are in a hurry to make a lot of money, consider the partner option but follow the rules and take good care of you partners. The extra bonus to you is that as you help your partners improve their financial status and situation you will receive many thanks and appreciative comments. It is such a great feeling to know that you are helping other people as you help yourself too!
Previously on Mark O. Haroldsen's Blog