10 Rules For Success
by W. J. Mencarow
President, The Paper Source, Inc.
Editor, THE PAPER SOURCE JOURNAL

In today's competitive market, you'll be tempted to cut your profit margin
drastically just to get the deal.

Don't do that. That "strategy" has put a lot of people out of business.

Maybe you can be a successful auto dealer by making a low profit on each
sale if you have huge volume, but that doesn't work in the note/cash flow
brokerage business. Why? Because most note brokers cannot deal in volume.

The reasons most people cannot be high-volume note brokers are:

(1) it takes a long time to put each deal together;

(2) you won't find enough notes to create a high volume business, and

(3) your transaction costs, especially the cost of your time, are
high for every deal.

Most people have no idea how to put a price on their time, so they
ignore it. That's a big mistake. To calculate how much your time
is worth, go to http://www.businessknowhow.net/bkh/timeprice.htm

It is possible to be a high-volume note broker. You could tap into a market
where notes are created in high volumes. For example, you could develop
relationships with land developers or manufactured home dealers
and/or dealer/builders.

But, if you are like most note brokers, you have tangible and often-overlooked
intangible overhead that will eat up a low profit and leave you with nothing
except red ink.

Don't Negotiate A Loss
When you are in a negotiation and have your back to the wall, just
tell the note seller that $XX is your final offer, and if he can do
better elsewhere, then he should go there.

Either way you win. Either the note seller is conning you and when
he discovers you are serious he will agree to your price or terms,
or he will go elsewhere -- which is fine, too, since you cannot stay
in business being the cheapest broker in town.

Here are some rules for you to consider based on my experience
over the years:

1. No matter how low you quote the note there is always a newbie
out there willing to do it for less.

2. The more you cut your price to get business, the more likely
you are to go out of business.

3. The more you try to compete on a price basis the lower your
prices will go. Corollary: Your income will follow.

4. Increasing your ad size increases the percentage of low profit
calls you get.

5. The bigger your yellow pages ad, the more low-priced calls from
non-repeat customers you will get.

6. The prize for beating out all of your competitors for the
biggest, most expensive ad in all of the different yellow pages
books is bankruptcy.

7. The more you advertise that you have 24-hour service, the more
security guards and insomniacs will call you in the middle of the
night to ask you how much you will give them for the mortgage they
are paying on.

True story: Someone once asked me how much I would pay to buy his
rent payments. A landlord selling a lease? No. He was a tenant
"selling" the monthly rent he was paying.

8. Advertise as a 24-hour service and you will get angry calls
from people who stopped by your office at four in the morning and
you weren't there.

9. After you teach them the business your best note buyer will
quit, open an office and undercut your prices.

10. The one who is untrainable will stay with you forever.

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