Starting an Internet Based Business – 2 Business Killers That You Need to Be Ready For!

People everywhere are jumping on the band wagon and starting an Internet based business in search of a better way of life. I congratulate those that take the leap and dive in to create something of their own that can make their way they live and work much more enjoyable. However, business ownership is not for everyone! Those that are considering starting an Internet based business should prepare themselves for the journey ahead. Building a business can be exciting and frustrating all at the same time.

As a new Internet entrepreneur you will need to prepare yourself for the challenges that you will face while you build your business. Those challenges can come from every direction and blind side you when you least expect it. There will bumps in the road and mountains to climb on your way to success. I’m not telling you this to scare you, but to make sure that you go into your new venture with your eyes wide open. Building a business online is not that much different than building a business in the off line world. It will require your time and effort and commitment in order for you to enjoy success.

Beware of the promise of instant riches;

One thing that all new would be Internet entrepreneurs will encounter is the constant onslaught of “the next big deal”. As you surf the Internet, you will find many that will promise instant success and untold riches are only one click away. Now I’m not saying that there is not some excellent advise for the new Internet marketer. There are great products and courses everywhere you look and they may well provide you with just the information that you need to take your new business to the next level. Just be aware that all the information and courses in the world will not make you rich! The only thing that will really have a positive impact on your business and success is the action that you take.

There are products and courses that will help you get through your learning curve. They can give you instruction on building a web site and driving traffic but they won’t do the work for you. It is very easy to become a marketing information junkie and never really get your business off the ground. You can spend months and even years of your time and thousands of your hard earned dollars and still have no business. You don’t want to be afraid to invest in your education but you do want to commit yourself to using the information that you have and master it before you move to something else. That brings us to the next obstacle that you will encounter..

The learning curve;

Anytime you do something that you have never done before, you have to take the time to learn how to do it. Building an Internet business is no exception to that rule. Think about it, a doctor making a six figure income didn’t just jump up one day and decide to open a practice and start making the big bucks. That doctor went through years of school and then more years of internship before they could even think of starting their own practice. The same doctor will probably spend years paying off student loans that they used to get their education. Our doctor has a significant investment of both time and money before they ever began making that income.

Starting an Internet based business offers the chance to make the doctors income with significantly less time and money invested in education. Make no mistake that there will be an investment and a learning curve before you realize success. If you go into your business clear on the investment that will be required of you to achieve the success you desire, you will be leaps and bounds ahead of 98% of those that aspire to have online success.

How to Start an Auto Repossession Business

If you’re sick and tired of your job, now may be the best time to start an auto repossession business.  That’s because when foreclosures, loan defaults and bankruptcies are up, the repo business thrives.  When people can’t make their car payments, banks and dealerships pay good money to repossess their cars.

If you’ve thought about starting an auto repossession business, here’s what you should know, first…

Repo Business Fact #1 -  You Might Not Need Formal Training

While it’d be foolish to start a repo business without investing in training materials, most states don’t require you log training hours before you get your repo license.

In most states, auto repossession companies are regulated by the same agency that oversees private investigators and/or debt collectors.  The best way to find out your state’s repossession laws is to contact your state’s Secretary of State division or invest in a comprehensive repossession course.

Repo Business Fact #2 – You Might Not Need A Tow-Truck

That’s because most finance companies keep copies of the key codes to every car and truck they issue loans for.  All you have to do is find a locksmith to cut a key from the codes.  Although, that’s usually not necessary because a lot of banks keep spare keys on hand, already!

What that means to you is, you can team up with another person to follow you repo sites, and one of you can drive off in the car you’re repossessing.  While it’s not always that simple, it’s easier than investing in a tow-truck when you’re just starting out.

Repo Business Fact #3 – You Can Do It Part-Time

Because many auto repossession agents work at night, you can keep your day job (if you want,) and repossess cars at night.  Then, once you establish a good reputation in the business and you get more clients, you can gradually devote more hours to your new business.

Many new entrepreneurs get overwhelmed when they first think about starting a new business.  But, that’s not necessary, because if you keep your costs low and you build your business gradually, you can reinvest your profits as your repo business grows.  There’s no need to do everything at once – that’s a recipe for exhaustion.

Asset Allocation and Diversification

Asset allocation refers to how much money you have invested in each of the major asset classes such as stocks, bonds and cash. Studies have shown that asset allocation is one of the most important investment decisions an investor can make, accounting for as much as 90% of return. Asset allocation is the process of determining the percentage of your investment portfolio that each asset class should occupy, based on your risk tolerance.

Each asset class provides you with a different level of risk and different levels of potential return. Owning just one asset class, such as stocks, would be risky because the value of your entire portfolio would depend entirely on the performance of that asset class. The overall purpose of asset allocation is to reduce volatility so that thriving investments in one asset class potentially outweigh losing investments in other asset classes.

To determine your asset allocation you first need to determine your risk tolerance. Two important factors that affect your risk tolerance are your time horizon and your personal response to risk. Your time horizon is the amount of time you have before you will need the money you are investing. In general, if you have a long time horizon (10+ years) you can invest with a higher risk tolerance (aggressive). A moderate time horizon (5 – 10 years) can tolerate moderate risk and short time horizons (1 – 5 years) should use a low (conservative) risk tolerance. However, the second factor, your personal response to risk, must also be taken under consideration. If you avoid risk in everyday life or worry easily, you need to be more conservative. You don’t want to get ulcers or lay awake at night worrying about your aggressive investments even if you have a long time horizon. If you enjoy risk and don’t worry easily, then you may want to lean toward the aggressive allocation, if you time horizon allows it.

A very basic model for asset allocation is as follows with the first number in stocks, the second in bonds and the last number in cash equivalents: Conservative 10%, 20%, 70% Moderate 50%, 20%, 30% Aggressive 75%, 15%, 10%.

There are many, many asset allocation models out there but they all follow the basic premise of having a higher percentage in stocks (or stock mutual funds) as you move from conservative to aggressive with the bonds/cash moving in the opposite direction.

Don’t overestimate your tolerance for risk in good times. If you are invested too aggressively when the market is rising, you are more likely to abandon your investment program when the market is falling. The most ideal asset allocation is that mix of assets that you can stick with in good times and in bad.

You also need to diversify within the major asset classes. As an extreme example, a portfolio with one stock, one bond and cash could have proper asset allocation but is not diversified at all. Most investors should invest no more than 5% in an individual stock or bond.

Diversification refers to owning various investments within each asset class. Don’t own all or your stocks or mutual funds in one industry (such as technology). Don’t own all municipal bonds or municipal bond funds. Stocks and stock funds (also called equities or equity funds) are divided by their market capitalization, their investment style, sector and geographic location.

Market capitalization (market cap) is equal to the number of shares the company has issued to the public multiplied by the value of a single share. So the terms large cap, mid cap and small cap basically refer to large companies, mid size companies and small companies.

Investment style refers to whether a mutual fund invests in growth stocks or value stocks or a “blend” of both. Growth funds invest in companies that are rapidly growing businesses. Value funds invest in companies of established, slower-growing businesses. Those funds that invest in a mix of growth and value stocks are called blend funds.

Sector refers to the specific industry a company is in or a fund invests in. Examples are energy, financial services, utilities, health care, technology.

Geographic location refers to investing in companies from a certain part of the world. Many funds are just focused on the US while others may focus on only foreign stocks or just stocks from a particular region such as Latin America, Asia, China, etc.

If we put these different types of assets on a risk continuum it would look as follows with the highest risk first and the lowest risk last: Commodities, Small cap stock, Foreign stocks, High yield bonds, Mid cap stocks, Large cap stocks, Real Estate Investment Trusts (REIT), Intermediate term bonds, Short term bonds.

So now if you put everything together that we have learned about asset allocation and diversification we can come up with a portfolio that has both asset allocation and diversification for the greatest potential growth while limiting risk to a level that suits your financial situation and personality. The first number is for conservative, the second for moderate and the last number for aggressive. Large cap stock 10%, 40%, 35% Mid cap stock 15%, 10%, 17% Small cap stock 7%, 3%, 17% Foreign stocks 14%, 25%, 22% Bonds 43%, 22%, 9%, Cash equivalents 11%, 0%, 0%.

Again, there are many, many asset allocation models out there and this is just an example of how it works. As before, the percent in stocks grows as you move from conservative to aggressive and the percent in bonds moves in the opposite direction.

Below is an example of how you could have asset allocation and diversification with just seven funds. The first number is for if you are are to mid career, the second number for late career and the last number for in retirement. Blue Chip US Stock Fund FSMKX Fidelity Spartan 500 Index 40%, 30%, 20%. Blue Chip Foreign Stock Fund VGTSX Vanguard Total International 30%, 25%, 15%. Small Company Fund PRNHX T. Rowe Price New Horizons 5%, 2.5%, 2.5%. Value Fund VIVAX Vanguard Value Index 5%, 2.5%, 2.5%. High Quality Bond Fund VBMFX Vanguard Total Bond Market Index 10%, 20%, 30%. Inflation-Protected Bond Fund VIPSX Vanguard Inflation Prot Sec 5%, 10%, 10%. Money-Market Fund FDRXX Fidelity Cash Reserves 5%, 10%, 20%.

Morningstar.com is an excellent resource to use for studying your portfolio. Morningstar developed the equity style box where they put the diversification info in a square box with nine boxes for a graphical representation of where the market cap and investing style falls large to mid to small down the side and value, blend, growth across the top.

If you aren’t interested in trying to figure out which funds to purchase and aren’t interested in rebalancing your portfolio once a year, you may be better off putting all of your investments into a target-date fund. These funds invest based on the time horizon you have and re-adjust as you get older and you get closer to retirement. The funds have a year in their name, such as 2025, 2030, 2035, etc. Pick the fund with the year closest to the year you plan to retire.

You do have control over the quality of the investments you own, the diversification of your portfolio and how long you hold your investments. Right now, many investors are discouraged, some are angry or upset, and others are just plain confused. The best way to survive any crisis is to have a well-thought-out strategy and not let emotions drive your investment decisions. Time is your greatest friend. Emotions are your greatest enemy. Focus on the things you can control. Base your investment decisions on investment principles, not predictions. The three most important investment principles are focusing on quality investments, diversifying your portfolio and holding your investments for the long term. Don’t abandon those principles.