The Ultimate Guide To Financial Prosperity

INTRODUCTION

NEVER GIVE UP - PERSEVERE - AND, WITH THE KNOWLEDGE YOU HAVE HERE AT YOUR DISPOSAL - YOU WILL SUCCEED.

More recently Calvin Coolidge wrote :

Nothing in this world can take the place of persistence. Talent will not;
Nothing is more common than unsuccessful people with talent. Genius will not;
Unrewarded genius is almost a proverb.
Education will not;
The world is full of educated derelicts.
Persistence and Determination alone are omnipotent.
The slogan "Press On" has solved, and always will solve, the problems of the human race.

CHAPTER ONE : THE SECRETS OF OBTAINING A FIRST CLASS CREDIT RATING.

After having had over 20 major credit cards, bank loans and overdraft facilities, with an ability to raise in excess of £100,000 in credit, I was left with massive debts and a credit rating so poor that I couldn't even open an ordinary bank account!

The one sure thing I learned about borrowing vast quantities of money, at high interest rates, to finance business deals and ventures, is that access to credit is virtually essential for any real wealth creation.

It was unfortunate for me that I had to learn the hard way about the importance of maintaining an excellent credit rating. After having access to easy credit, I lost hundreds of thousands of pounds on property deals and other business ventures. Only after this experience did I realise how fortunate I had been to have been in the position to gain the kind of credit I was using in the first place. I have now re-established my credit rating to a first-class level, and I intend never to create a situation again where my credit rating is put in jeopardy. The method detailed below is the one I used to rebuild my credit rating back to a level where I will never need to worry about access to money for any purpose. When you have no money at all and your assets are all frozen because of debt, and no bank or other lending institution will lend you a penny, you may think that creating a credit rating where you can eventually borrow almost unlimited sums would be virtually impossible.

In fact, with absolutely no cash at all, it is virtually impossible. Some amount of cash is essential. To get this plan up and operational within the couple of months that it takes to become productive an ideal sum of money would be in the region of £1,000.

After enjoying a fairly wealthy lifestyle and being used to the finer things in life, I ended up broke and almost bankrupt. I avoided bankruptcy by the skin of my teeth.

To get some money to start my credit building plan I took every one of my personal possessions which I thought I could sell. I attended car boot sales, at which I managed to raise just over £350. I put together another £300 by selling furniture and other personal effects through adverts in the local paper. Keeping £150 as an emergency fund I took £500 to the nearest bank and opened the highest interest savings account that I could get. After a week I applied for a personal loan from the same bank and offered my £500 deposit as security. Because the sum I wished to borrow was already held by the bank, they were only too glad to loan me the £500.

So I then had £500 cash in hand and £500 in the bank. Naturally I had to make monthly repayments to the loan. These were kept to a minimum by taking the loan out for the maximum period allowed, which was 2 years. This left me with repayments of less than £1 a day.

I then took the £500 I had borrowed to another bank and opened another high interest savings account with it. Following the same procedure I opened savings accounts at six banks and used the final £500 to cover the repayments. After a couple of months repayments had been made to each loan I took the £150 emergency fund I had set aside and added it to the capital I still had. I used this to repay the last loan I had taken out. This allowed me access to the savings I had with that bank. Then, after each subsequent month I paid off each of the loans in turn.

Having done this it was easy to go to the first bank and apply for a loan of £500 secured on my home. They were happy to lend me this money because I had shown them that I could borrow and repay a previous loan. So, in spite of my terrible credit history, after having lost a great deal of money in business ventures which went wrong, I had rebuilt my credit rating to a first-class level within six months.

If you have no previous bad debts there is no reason why you could not establish this level of credit rating within two months.

And once you have established a credit rating with a few banks you can apply for their credit cards. Initially you may have to settle for a fairly low account limit, but this can be increased rapidly by using the credit cards to borrow money up to the limit of each card every month, and then repaying the full sum at the end of the month.

Within a few months you can request and normally will be granted an increase in credit limit. I used this method with store-cards also and now have a £5,000 limit on most credit and store cards I use.

One thing to always keep in mind : once you have established an excellent credit rating, don't lose it. I became too careless with borrowed money in the early days because I had easy access to credit. Now that I have rebuilt my credit rating to a top notch level I will never let it be ruined again.

Always be very careful when borrowing money to invest in wealth generating programmes. Do your research...don't just jump in at the deep end...I did, and lost out, big time!

Keep your credit rating healthy by always ensuring that you are able to make any repayments that are due, and make these repayments on time. Even if you have to borrow from one source to make a payment to another, this can be worth your while as the maintenance of your credit rating is one of the most important things you will need to take care of on your journey to financial prosperity.

CHAPTER TWO : HOW TO HAVE CCJ's LEGALLY REMOVED

However, it is always in your best interest if you have CCJ'S on your credit record, to have them removed as soon as possible. Records of CCJ'S are kept by four main credit reference agencies for a period of six years from the date of their inception. After this time they should be removed automatically, and if they have not been, then you can simply write to the credit reference agencies and order that they be removed. In order to find out what information the credit reference agencies have on you, you should write to them to enquire. Include your full name and address, any previous address(es) you have lived at in the past six years, and £1 to cover administration fee.

The four main credit reference agencies used by lenders to check on your credit history are :

CDMS, Dove Mill, Dean Church Lane, Bolton, Lancashire, BL3 4ET. CNN, PO Box 40, Nottingham, NG7 2SS.

Equifax, Spectrum House, 1a North Avenue, Clydebank, Glasgow, G81 2DR.

Infolink, Regency House, 38 Whitworth Street, Manchester, M60 1QH.

Once you have obtained the information you need from these agencies, you can decide what action you wish to take.

NB : In order for any record of CCJ'S to be legally removed, you must be able to prove that at least one of the conditions below applies :

1. The six year period has expired, and the record should be removed as being out of date.
2. The record should not have been lodged in the first place, as the CCJ does not exist, and the record is a mistake.
3. The debt to which the CCJ applies has been fully paid off. Here you can insist that the CCJ be removed because you have cleared all of your financial indebtedness.

To apply to have judgements overturned, you should obtain form N244 from your County Court (or Sheriff Court in Scotland). During the period in which your application is being considered all records of judgements against you are removed from the records of credit reference agencies. Then several more weeks usually pass before the agencies can re- instate these details, so even if your application is unsuccessful you have a period of around 8 weeks where you have no CCJ'S on record.

In order that any judgements against you be set aside you must have a valid reason, such as not receiving the original summons, being unwell or out of the country at the time the summons was issued, or having discharged the debt within a period of 28 days from the original issue of the summons, in which case no record should have been registered.

CHAPTER THREE : RAISING THOUSANDS IN A MATTER OF DAYS.

Fill out the loan application for a sum of between £500 and, say, £2,000. Even if you apply to borrow only £500 from each of six banks, that still amounts to a total of £3,000.

Take the applications home, fill them out and take them, in person, to each of the banks all on the same day. By doing this, any check on your borrowing will only show up for any loans which you already have. The banks will not have details of the loan applications made to other banks on the same day.

Because the individual sums for which you are applying are relatively small, and because you have already established yourself as credit-worthy with each of the banks to which you are applying, you should find that the loans are approved within a matter of days. Sometimes you will get clearance on the same day you apply and can leave the bank with a cheque for the loan amount.

Often banks will deposit the money directly into your account with them. If this is the case you simply go to the cash desk and make a withdrawal for the full amount either later the same day or whenever it suits your convenience. Using this method I borrowed £8,000 and deposited the full amount with another bank from which I had not originally borrowed. I deposited £5,000 in a savings account with that bank, and £3,000 in a current account.

By lodging the £5,000 as security I then was able to borrow a further £5,000 and repeat the process as detailed in chapter one. Ultimately borrowing £30,000 I then invested in a small run-down, one bedroom flat for £18,000. I paid £7,000 to have this flat completely renovated and sold it 6 months later for £32,000. Even after interest payments I still made a profit of over £5,000. £5,000 in the space of 6 months is not a great deal of money, by any standard. However, when you consider that I had been virtually bankrupt less than a year earlier and started the whole venture with only £650 in total I think you will agree that it is not a bad return.

I mention the property deal here because that is what I did with the money I borrowed at that time. I have been involved in many property deals over the years, most of which have made considerably more than £5,000...often more than ten times that amount. This example is pertinent here because it shows what can be done with the smallest amount of starting capital.

Once you have used the method of borrowing detailed above, you will eventually develop a credit rating where you will be able to borrow between £10,000 and £20,000 within a day or two of applying.

If you keep building up the amount borrowed, and expand the number of banks you deal with to ten, then you only need to borrow £10,000 from each one in order to raise £100,000. First of all you can borrow as little as the £500 originally discussed in chapter one. But expand the number of banks you use to ten. You then go to as many as all ten of these banks and request a 30-day loan of £1,000. Because of the credit rating you have established you should have no trouble at all in borrowing such small amounts from each bank.

When the 30-day borrowing period is over, repay the whole amount to each bank on the same day. After another month or two, go to all of these banks again and ask to borrow £2,000 for a sixty or ninety day period. Again, repay the loans promptly at the end of the sixty or ninety-day period. After another two or three steps using this method, you will be able to borrow at least £10,000. Because you will now be recognised by the banks as someone who is a very good lending risk, you should be able to have a loan of £10,000 approved, at each bank, within a day or two.

So, once you have built your reputation for credit-worthiness, you can raise at least £100,000 within two days of applying.

CHAPTER FOUR : A GUARANTEED INCOME OF £100,000 IN A YEAR.

One excellent method of amassing a large amount of capital and guaranteeing yourself a very high annual income is to form your own corporation. The cash you generate from the sale of shares is much cheaper than borrowing...there is no interest to pay, it does not incur monthly repayments will pay your salary and is not subject to taxation.

Regardless of what the company does by way of trading, it is possible to issue shares at a nominal value of, for example, £1.00 each. You can buy a limited company off the shelf and convert it to a public limited company. You then write into the company charter an authorisation for the issue of one million shares with no par value. These shares are then divided into lots for distribution. You could keep 300,000 shares for yourself, allocate a further 400,000 for sale to the public at £1.00 each. Then set aside the remaining 300,000 for sale at a later date, when the value of the shares has risen, so that the sale price is much greater than the original £1.00 each.

Contact a stockbroker and offer to let them sell your shares at an agreed commission (normally around 20%). Impress upon the broker that yours is a new company which is set for rapid growth.

With the capital raised from the initial sale of shares invest in getting the company up and running. Once you are trading profitably your shares will start to appreciate in value. It is not uncommon for shares in a newly established company to show a three or four-fold growth within the first few months of trading. The initial capital from the sale of 300,000 shares, less 20% brokers fee, will leave you with an operating capital of almost a quarter of a million pounds. With this kind of money it is a fairly straightforward process to employ sales and management professionals to run your company and financial experts to advise on the best commercial strategy.

With a three-fold increase in share value your 400,000 shares now have a nominal value of £1,200,000. The remaining 300,000 worth of shares can then be sold at £3.00 each or close to that amount. Supposing you can sell them for only £2.00 each, you still are able to raise a further £600,000 in operating capital. Keeping your 400,000 shares as a nest-egg for your future, you award yourself a salary of £100,000 per annum as the company chairman. You don't even need to take on a managing director's responsibilities, and would be well advised to employ an experienced business professional to fill this post. The most difficult phase of establishing your own corporation will be in converting your limited company to plc status. The formation or the buying off the shelf of a ready formed limited company is a straightforward process. However, in order to elevate your limited company to public status will require expert professional guidance.

It is quite possible though, that you could find a suitable business professional to perform the necessary work for an agreed shareholding in your new company.

CHAPTER FIVE : ALL THE CREDIT CARDS YOU COULD EVER WANT.

Quite often you will find banks advertising credit cards at a preferential interest rate. The advertising usually concentrates on the concept of using that particular bank's card to consolidate all your borrowings from other sources which have a higher rate of interest. When you apply for a card advertised as being a handy way of paying off all your other cards and overdrafts the issuing bank will assume that you are going to use their card as an alternative to the cards you already have. Because of this they will be keen to issue their card with the minimum of fuss. However, once you have obtained their card you are under no obligation to cancel the cards you already have.

As mentioned in chapter two, apply for and obtain as many cards as you can get. Providing you have kept to your repayment agreements on all loans and cards there is no reason that you should be refused any new cards for which you apply. I now only use three major credit cards and two store cards. This is because I have managed to accumulate working capital and tend to use current account overdrafts when needed. However, in the early days of needing fast cash for business investments I used over 20 credit cards.

CHAPTER SIX : VIRTUALLY UNLIMITED FINANCE FROM YOUR CREDIT CARDS.

Before I made the mistake of investing in business opportunities which I had not looked into in enough depth, and so consequently lost money on, I used credit cards to borrow several thousands at a time to finance some very profitable deals. Some of these included the cash purchase of luxury cars, often after I had already located a buyer with ready money to buy from me immediately after I had taken possession. The best of these deals was when I bough a Mercedes 190E for £8,750 from a private owner in London and sold it for £11,000 to an eager buyer in Edinburgh who had already told me that was the price he would pay for this particular car. The purchase price was raised solely through my Visa and Mastercards.

I actually borrowed £9,000 and took a luxury overnight stay at the Hampshire hotel in Leicester Square as a perk of the "job". The best part, though, was driving the car from London to Edinburgh.

I knew that I was making a sound investment, because, even if the man who had agreed to buy the car from me had changed his mind, I had a car with a book price of around £12,000 for less than three quarters of that sum. The very worst I was likely to end up with was my money back!

Although I have made more money in property dealing than any other business venture, followed closely by selling information, I still buy and sell the occasional luxury car. Not because I need to, sometimes I only make a few hundred pounds. I do it, just occasionally, because I enjoy it...it certainly beats working for a living! Please note, because of the high interest rates of credit cards it is often not a good idea to use the money borrowed on them to finance property deals. The trouble with property, although it is nearly always a good investment, is that it can take some time to turn it around.

Credit card borrowing should only be used when you are virtually certain that a property is going to be ready for sale in a very short time and that you are confident that it will sell quickly. I bought a shop, over three years ago, which I still have not managed to sell. It has been on the market now for over two years and looks like it will be some time before I finally dispose of it. The initial sum of £25,000 for purchase and repairs was raised on credit cards. But, after paying out thousands in interest I finally paid off the credit cards with a long term bank loan. I was able to use the property itself as collateral, so getting the loan was not a problem. I mention it here simply to warn of the dangers.

When I first decided to buy the shop I was confident that I could have it ready for sale within three or four months. This I did. I then used it as a storage space for a further 9 months and then put it on the market. I know it will sell eventually, and I expect to get the asking price of £57,000, but my initial hope of a fast profit soon disappeared.

So, although there is great potential in using your credit cards as a means of raising cash quickly to finance lucrative deals in property or any other business transaction, please be warned: Tread carefully. Providing that you take care to research the opportunity in which you intend to invest, and make certain that you have every last iota of information available, there is no reason for you to not make excellent profits. And once you have done a few deals in whatever area of business you choose, you should recoup the profits to build yourself a capital base. Working like this you will soon be able to finance your dealings with your own money.

CHAPTER SEVEN : FINANCE YOUR BUSINESS - 100%!

However, most budding entrepreneurs will have little or no capital. This can be very frustrating when you know you have a good money earning idea and have worked out how to set up and profitably run the business. So, unless you have enough money of your own to finance half the business start up costs, it is best to avoid a business loan. Instead apply for a personal loan. Tell the bank it is for a home improvement or the purchase of a new car, or for major property repairs. Provided that you can satisfy the bank that you are a good credit risk, they are not particularly concerned as to exactly what you will do with the money.

Because you can borrow smaller sums from different banks, you do not even have to be particularly concerned if you are unable to secure the full sum from one source. Remember though, that if you are applying to a variety of sources, try and get the applications in on the same day. This way, when the lenders do a check on your existing borrowing, there won't be any information which they can obtain to show that you are borrowing anything other than the amount you are applying to them for.

CHAPTER EIGHT : CONTROL OF COMPANIES - WITHOUT CAPITAL.

When you locate a company which fits the criteria of being in a very bad financial condition, find out everything you can about it. Get all the information you can on how much it owes, what it's assets are worth, who is running the operation. Particularly look for reasons as to why it may be struggling the way it is...is there something about the marketing operation which could be improved, could the product(s) be produced a lot cheaper than hitherto, and when was the company last trading profitably?

When you have collected all the information you can about the assets, liabilities and potential of the business, work out how much it is worth, on paper. This sum should be the amount you could realistically hope to obtain if you were to put the business up for sale. It is the amount the assets of the company are worth after deduction of all liabilities.

Once you have arrived at what you consider to be a realistic valuation prepare an offer to buy the company for between 25% and 50% of this amount. However, you will not be 'buying' the company for cash. You will offer promissory notes, with an option to pay over a ten year period, in settlement.

If the owner or owners refuse to accept your offer you may need to revise your position. If necessary, offer a five year pay off period for the promissory notes and suggest a profit sharing plan which will reward the owners for allowing you to take charge of the operation. Another option would be to offer all interested parties part ownership of the business by way of issuing them with stock or shares.

When negotiating your offer with the owner's insist that, due to the very poor financial health of the business, you will need to withhold any payment on promissory notes or dividends to shares, etc., for at least a year. This will give you time to either make the company profitable again, or, as a last resort, sell it off and make what you can from the assets.

You should seek the advice of a lawyer and have him/her draw up the terms of the take-over agreement. Try to close the deal as quickly as possible, remember, the company is on the road to liquidation, so you must project yourself in the image of a saviour. Impress upon the owners that, without you, the company is doomed to sure failure and bankruptcy. With your help the whole operation could become profitable once again.

Don't be put off if you have no business experience. The majority of take-over bids are by people who do not know how to run the business that they are taking over. They simply show a professional image, offer to help the business by arranging to reschedule it's debts and changing it's production and marketing procedures to turn it around to profitability.

If your concern is to try and make the business profitable again, rather than to just sell it off and make what you can, then you can enlist the assistance of business consultants and marketing professionals to aid you in the return of the company to profitability.

When negotiating a take-over you must be firm, even a bit ruthless. It is in the owner's interest to see his or her firm taking on a new direction, and a return to profitability which they have not been able to achieve themselves. They might not be very happy about an outsider coming in to take over the running of things, but when the alternative is sure to be liquidation, the choice they need to make should work in your favour. Don't be discouraged by the complaints from owners and shareholders that what you are offering is too little. Impress upon them in the firmest possible manner that, without you, the business is doomed to total failure, and though you cannot guarantee to make it a success, you can certainly give it a much better chance of survival than it currently has.

Once you have negotiated suitable terms for a take-over your first priority will be to deal with the people to whom the company owes money. This can be much more straightforward than you may have thought. Because the creditors will be aware that the firm has been in difficulties financially, and because they are expecting that the firm may file for bankruptcy and leave them with no payment at all, they will welcome any new initiative which gives them a better chance of being paid.

You should arrange to meet the creditors individually. Offer to pay between one third and one half of the debts outstanding, with nothing to be paid for the first year, and an overall instalment period of up to ten years. At first you may think you will get a lot of resistance to your offers. Why should creditors accept as little as one third of the money they are owed, and wait a year before even being paid the first instalment, which could be as low as one tenth of the total you are offering to repay? The answer is that, as an alternative to being paid nothing at all, this is quite an attractive offer. The creditors will be only too well aware that the business which you have just taken over has been in financial difficulties. They would probably have resigned themselves by this stage to the idea that the firm which owes them money was heading for liquidation. They know that a firm which goes into liquidation will often have nothing left, after it is wound up, to pay creditors. Most, if not all the creditors will be expecting that none of the money they are owed would ever get paid. So your offer should appear very attractive to them...a lot better than nothing at all!

Draw up the terms of your offer in a letter and send a copy to each of the creditors. Request that they sign the letter as confirmation of their acceptance of this new agreement.

So, you now own the firm and already you have reduced it's total debts by at least 50% and have removed all obligation to repay any debts for the next 12 months. This has all been done simply by negotiation, no capital was needed! Your next move is to look at ways of returning the company to profitability. It is very likely that the firm will own assets which are not essential to the day to day running of the business and which could be sold to provide cash for improved efficiency and expansion. Assets, not essential to the running of the business, might include machinery and equipment, vehicles, stock, property, patents and copyrights, licences and contracts. Sell whichever of these which are not absolutely essential to the operation of the business. Get the best price you can, in the shortest possible period of time.

Draw up a plan of action, with the help of marketing and management professionals if necessary, which will make the company profitable. Set targets and goals and do your utmost to see that they are adhered to. If the sale of assets does not produce enough working capital to get things going, look at other ways of raising the necessary cash. One good idea is to form a partnership of professional business people who have available funds. You will need to convince them that what you offer is a worthwhile investment, so your business plan will have to show exactly how you intend to return the firm to profitability.

To make the company more efficient you must concentrate on what it does best and what it sells most of. Perhaps you could discontinue certain products which have not been selling well. Push hard to promote the products which it is best at producing and for which the demand seems highest. If any part of the operation has been running at a loss, and does not look like it can be turned around, sell it off. Be ruthless. Remember that, unless you strip costs to the bone, and maximise income wherever possible, the business will almost certainly fail totally. There are a great many books available which go into detail about how companies have been saved from complete collapse. The famous trouble-shooter, John Harvey Jones, has written several titles, such as 'Back from the Brink' and 'Managing to Survive', which are an invaluable source of information to the person looking to take over failing companies and "turn them around".

CHAPTER NINE : "BORROW" MONEY - THAT YOU DON'T NEED TO REPAY.

The best way to get equity capital is to go public. Form a public limited company and sell shares to interested investors. Although you are technically 'selling' something in return for this capital, you are not actually having to dispose of any assets, so the money so obtained comes in without the need to give anything up in return for it.

Of course you must retain control of the company by ensuring that you keep ownership of at least 51% of the shares issued. As the main owner you have the final say in how the company is to be run.

So, when you raise equity money, your company does not have to have made a sale of any product. It can raise up to several millions of pounds operating capital without having to dispose of either stock or assets. This capital can be used for a multitude of purposes. You can use it to pay off debts, salaries, rent, taxes, buy property and stock, pay for expenses and running costs and to launch a new marketing campaign in your drive towards profitability. Another method of borrowing money which you can keep indefinitely is to take out loans to repay existing loans. When the new loan needs to be repaid, take out a further loan to repay it. This may sound somewhat strange as you will have to pay interest on the money borrowed. However, if you need finance in the long term and can use the money to produce enough profit to repay the interest but do not wish to repay the capital, this is an excellent method of doing so. What to do is to apply for credit at twice the number of banks from which you would actually accept loans. So, if you applied to a dozen banks for £5,000 from each one, and accepted a loan from only half of them, you would raise £30,000. If you have these loans for the short term, i.e. 60 days, you could then go to the remaining six banks and accept the six £5,000 loans to pay off the original ones. This process could be continued so that you are constantly paying back loans with other loans.

This may seem like an unsound way of financing business deals, but when you have access to opportunities which produce sufficient profit to pay for the interest charges and give you a good income also, it can be very useful in that you are not burdened by the need to repay the principal sum borrowed. Or at least to not repay it from your own pocket.

Although this system can be employed to keep the borrowed money indefinitely, the idea is that you should use it for investing in money-making deals which will tie up the capital for the long term. After a prolonged period, and once you have made sufficient profits, the business transactions in which you have taken part should ultimately produce sufficient profits to repay the capital outright. I have a friend who borrows money using this method and buys property to furnish and let out to tenants. The rental income is always sufficient to repay interest and leave him with a good income. After a few years the property is usually resold to make a capital gain, leaving him with funds to repay the capital borrowed with a tidy sum left over as pure profit for future investment.

CHAPTER TEN : BECOME A PAPER MILLIONAIRE - ALMOST INSTANTLY.

There are very many advantages in creating a company of limited liability. The limited company is recognised as a separate trading entity to it's owners and the liabilities created by the company need not be underwritten by the personal wealth of the owners.

An ordinary limited company cannot sell shares to the general public, in order to do so would involve 'going public', i.e. to become a public limited company. Smaller and newer companies may not be able to obtain full stock market listing, and so they have the option of becoming public without a full stock exchange listing. To do this the company must join the Unlisted Securities Market. Through the Unlisted Securities Market it is possible to go public whilst only making as little as 10% of the capital available to shareholders. The normal five years of records that are required to become fully listed are also not needed for USM listing and the advertising requirements are much less. When you are operating as a sole trader or as a partner you, and your business partner(s) where applicable, are personally responsible for all the debts and other liabilities of the business. This means that if your business was to fail, leaving large debts, you could end up having personal property taken from you by order of the court. In extreme cases you could even lose your home.

In a partnership the partners are jointly and severally liable, so each of you is responsible for any debts created by any of the other partners. This could lead to very bad financial implications should one of the partners incur debts of which you were not aware. You may have heard stories about one partner in a firm absconding with the assets and leaving the other partner or partners to suffer the consequences. Trading as a limited liability company precludes all these dangers. With a limited company you can trade in exactly the same way as you would as an individual or partnership, but with the following highly attractive advantages: In the event of liquidation you cannot be made to pay any of the debts of the company from your own personal wealth. The only liabilities for which you can be held legally responsible are for back taxes.

Capital can be raised by the sale of stock. This method can save thousands of pounds in bank and interest charges which would be incurred if you had to borrow the money. As a sole trader or partnership this option for raising finance is not open to you.

There are many tax advantages available to the limited company that are not available to individuals. Taxes paid by the individual directly to the Department of Social Security can be re-routed into more profitable areas, such as pension funds.

In the event of bankruptcy you are permitted to write off up to a maximum of £50,000 on a tax return. And because this does not affect your personal financial records there is no damage done to your personal credit rating. To form a limited company in the UK you can employ a company formation agency. You will find addresses for these in publications such as Exchange & Mart and the Yellow Pages.

Listings of these agencies are also available from Companies House, Crown Way, Maindy, Cardiff, CF4 3UZ, telephone: 01222 388588 (for England and Wales). In Scotland from Companies Registration Office, 100-102 George Street, Edinburgh, EH2 3DJ, telephone: 0131 225 5774, and in Northern Ireland from the Companies Registry, IDB House, 64 Chichester Street, Belfast, BT1 4JX, telephone: 01232 234488.

CHAPTER ELEVEN : ACCESS MILLIONS IN VENTURE CAPITAL.

It is generally accepted in the business world that the initial and ongoing profitability of new companies is greatly enhanced by early investment of working capital. This realisation has led to a flourishing venture capital market. There are many venture capital agencies operating in Britain today. Their job is to attract investment from corporate and individual investors and allocate the money to new and expanding businesses. These venture capital agencies charge a high rate of commission for supplying venture capital, but only if the business which they are financing is successful. If the business should fail, they attempt to recoup whatever cash they can to return to the investors.

Often, if a firm which they have invested in fails completely they will simply write off the investment. Investors know that this kind of venture capital funding is relatively high risk. They are prepared to take this risk because of the potentially much higher returns than can normally be achieved by simply buying shares in already established business.

Raising venture capital is a particularly suitable method of financing a new or expanding business which is not ready for stock market flotation. The investors own a percentage of the company directly proportional to the amount of their investment. It is not uncommon for a company to make a successful start with the aid of venture capital and later, when established and operating as a public limited company, for the managing owners to buy out the 'sleeping partners' who have supplied a large part of the initial investment to get things up and running. Most banks now have a venture capital subsidiary and a large number of specialist venture capital funds are also available. To be eligible for large a investment of this type of funding you need to have a sound business idea and a realistic and properly presented business plan. It is not within the scope of this guide to show you how to construct a business plan. There are many excellent books on this subject and by looking through titles in the business and commercial section of a good public library and good bookshops you will find all the information you need concerning the creation of a professional business plan. When you have a good business idea for a new venture or a realistic set of proposals to make a failing company profitable you should construct a business plan and cash flow forecast. Take this to venture capital lenders, either through your bank or from private sources, and, providing your ideas are realistic and your business plan is thorough and professionally presented, you can have access to hundreds of thousands or even to millions of pounds in capital.

An alternative method of attracting venture capital is to advertise directly for investors in your new or expanding business. Simply place classified advertising in the appropriate section of quality newspapers and specialist financial publications. Ads such as, for example, "Funding Required for Business Expansion" or "Capital Required for Exciting and Highly Profitable New Business Venture", will attract the interest of those who have money to invest.

When you receive a response to your advertising, arrange to meet with the interested parties and give them a presentation of your business proposals. Always act in a professional manner and appear confident and knowledgeable at all times. Sell yourself and your idea in the correct fashion and the necessary capital will be forthcoming.

You might be surprised how many previously inexperienced entrepreneurs have started in this way. Simply by showing the right kind of 'get up and go' ideas to the right kind of people, it is amazing how much money you could attract. There is billions of pounds of money circulating around in our economy every day. If you present yourself as a professional businessman or woman, there is no reason why you should not get yourself a share of it.

The venture capital is, naturally though, only the beginning. Once you have acquired the funding you need, you must ensure that the capital is put to work in the most efficient manner possible. You must do everything in your power to make a success of the business which you have gone to all the trouble of obtaining funds for. A great many potentially successful businesses fail because they are underfunded in their early stages, ensure that your new enterprise is properly financed and your chances of success are immensely increased. Managing to attract significant investment should not leave you feeling complacent about the day to day running of the business though. Throwing money into any business, good or bad, will always make things easier. However, just because you have managed to persuade investors that yours is a worthy cause should not distract you from your prime objective, that of making the company as profitable as possible. The investors are not giving their money away. They are taking a calculated risk in investing in your business because they hope to achieve a profit in exchange for putting up their cash. So, you should never attempt to raise venture capital for any enterprise that you are not confident can be made into a success.

CHAPTER TWELVE : A LOAN WHICH IS GUARANTEED BY THE GOVERNMENT.

With the backing of the ECGD, finance can be obtained in many and various ways. A supplier can insure up to 95% of his receivables with ECGD and assign the proceeds of this insurance policy to a bank. This will enable him to obtain finance from the bank on terms much more attractive than would otherwise be available.

The ECGD will provide an unconditional guarantee for 100% of the principal and interest of any loan acquired for the specific purpose of financing an export deal. If for any reason the exporter is not paid by the buyer, he has recourse through his ECGD insurance policy, to receive payment, providing he has not breached the terms of his contract. Full details of this loan guarantee and insurance system are available from the overseas trade departments of any major clearing bank.

Further government guarantees on loans for business enterprise, and even outright grants, are available in certain areas of the country. If you wish to start up a business which will create jobs in an area of high unemployment there are very attractive financial packages available.

Your local council and government economic development bodies will let you know what is available, for what purposes, and in which areas. Local area economic and business development projects can be contacted through addresses in the telephone directory or by getting in touch with your local Chamber of Commerce.

CHAPTER THIRTEEN : HUGE PROFITS FROM PROPERTY DEALS - USING OTHER PEOPLES' MONEY.

Naturally, having capital of your own for any business venture, whether it be property, manufacturing or the provision of a service, would be a good thing. But you may be surprised to know that the vast majority of people who have created vast wealth for themselves through property buying and selling, have done so with money which is not theirs. Borrowing money is one way of getting the capital needed to finance property deals. But an even more attractive method, and one which is particularly appealing to those who are not in a position to borrow enough money to finance the initial property purchase, is to buy the property for a third party, using their money. And taking a commission on the sale.

The way you make your profit here is to ensure that you can source properties, such as repossessions, which can be obtained at a significantly lower price than their true valuation. You find one or more clients who are looking for a particular type of property at in a specific price range. Finding these clients is not difficult. The reason they will come to you and be prepared to allow you to buy on their behalf is that you can inform them that you will obtain the property they are looking for at a substantial discount on the true market price. As an example; you find a repossessed property which you can buy for £40,000. You can find out from the general price of properties of a similar type in the same area what the true market value of this property is worth. Once you are fairly certain that the property is worth considerably more than you are able to acquire it for you can have this confirmed by a professional valuer. The valuation fee, around £120 including a survey, is well worth paying as this gives you a true professional's written valuation. The survey is also very important in case there is some structural problem of which you were not aware. This will eliminate the danger of becoming involved in offers for properties which have 'hidden' problems, such as expensive structural repairs.

You find from your valuation that the property which can be obtained for £40,000 has a true market value of £55,000. You negotiate a contract with the mortgagee to sell you the property for £40,000. You find a buyer who is willing to pay £52,000 for the property, a discount of £3,000 on the true market value. You then offer your buyer a further incentive of paying his 5% deposit. This makes your offer doubly attractive. Not only has the buyer already got access to a property at a saving of £3,000 off the true open market value, but also has no deposit to make (a cash saving of £2,600!).

Since the true saving to the buyer is an overall £7,600, he is very pleased with the whole deal. And, even after paying legal fees your profit is still in excess of £6,000. This method of making money on property transactions is very popular and employed by a great many people who make substantial sums without the need for capital.

Of course, the £2,600 deposit is actually paid to yourself. Because the buyer's lending bank or building society will require this amount to be paid to them in order to release the full £52,000 to you, you have to pay this amount, on behalf of the buyer, directly to his the lender. In exceptional circumstances you may be able to persuade the lender that the buyer has paid you directly, but this is not normally allowed.

If you do not have £2,600 of your own you can borrow it using the methods described in chapter one. Remember, at the end of the day this money is paid from the £52,000 which the lender ultimately pays you. So borrowing from credit cards or a short term, high interest loan is a perfectly good way of realising this amount for the cash deposit.

This type of deal is called a 'back to back' transaction and the selling and buying from the original mortgagee is performed on the same day. This means that you do not actually own the property, the deeds are transferred from the original owner to the new buyer and you, as the original owner's agent simply collect the profit.

An alternative to this method is to raise the finance through personal loans and credit cards and perhaps a second mortgage on your home and purchase the property for cash. This method is particularly suitable if you wish to buy at auction. Property auctions are a very good way to buy properties, usually repossessions, at a price well below their true market value. The hazard of using this method is that, by not finding a buyer in advance of arranging the purchase, you may take some months to sell the property.

Of course you can use auctions to obtain property on behalf of a buyer who will commit himself to purchasing from you once you have secured a property. The auction method normally allows you to secure a property for a deposit of 10% of the sale price. You need only find this 10%, instead of the whole amount. After having paid your 10% you usually have between six and eight weeks to complete the deal. This gives you ample time to arrange a 'sub-sale' transaction, where the final buyer obtains a mortgage for 90% of the price which you sell to him for. Since your selling price is likely to be between 20% and 30% greater than the price you have secured the property at, the final buyer's mortgage is enough to pay for the property and give you a handsome profit. The final buyer's incentive is great in that he has purchased a property at 10% lower than the market price, and has no deposit to make.

Tips to help increase your profits and ease sales : When you obtain a property have it cleaned and do any minor repairs which make the property more attractive.

It can often be worth your while to completely redecorate a property. The cost of a few thousands pounds to do this can enhance the resale value and make the property much more attractive to the buyer.

Make yourself known to local estate agents and have them inform you of any repossessions which are about to go onto the market.

Always act in a professional manner when dealing with all parties concerned in selling and buying. Project a smart, professional image and act like an experienced property buyer, even before you get experience. If you feel there are points you need to learn about, pick the brains of estate agents and surveyors.

Read all you can about property valuation and the property market. Keep up to date by studying all the estate agents' magazines and advertising newspapers.

Get onto friendly terms with a surveyor and valuer, explain that you will give him regular work in exchange for a discount. I normally get 20% off the usual valuation fee by going to the same surveyor/valuer that I have used dozens of times over the past few years.