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Monday, December 24, 2012

Business in Maine by Marc Charles

Question: I know you talk about living in Maine a lot, and you really love it there. But is it a great place to start a business?
E.L. Delray Beach FL


Answer Marc Charles:


My answer is two-fold. Maine is a great place to live, work and run a "digital business". But its not a great place to start a bricks and mortar type business - or anything retail.


A former governor referred to Maine as the "next Switzerland". Maine is about as far form Switzerland as you can get. The government is fat and lazy, there's almost no privacy when it comes to business or banking, the regulations are absolutely ridiculous, and finding highly skilled workers is almost impossible...unless you live in Portland or Augusta...and even that's pushing it.


When I first moved here in 1993 I traded commodity futures full time. Almost no one I met or hung out with knew what commodity futures were...they thought I sold insurance!


And so the Maine culture always come into play. Most of the people who live in Maine full time are from Maine. The people from "away" who live here are typically here part time...and tend to congregate on the coast.


There's also a segment of Maine which caters to the super-rich. These are not millionaires or multi-millionaires...I'm talking about the super-rich. These people look on Maine residents as "amusements"...kind of like going to LL Bean and hearing someone with a Maine accent.


I know of three super-rich hedge fund managers who recently built mega-estates between Lincolnville Beach and Rockport. One of these guys ruined the view of one of the most breathtaking farms in the country....in order to build his house.


I'm not ranting about the super-rich....or building homes on the ocean. But there is almost 3,500 miles of coastline, and this guy builds right in front of a historic farm.


If the focus of your business is online -- or web-based, in conjunction with phones and teleconfercing, Maine is unlike anywhere else in the world.


However, the untouched beauty is almost too good to be true. The air, lakes and woods are breathtaking, and the weather is fairly mild on the coast.


Well....I hope that helps.

Regards,

Marc

Thursday, December 20, 2012

Forex Scams

Question: Is the Forex market another ploy to get our money? I mean it looks much harder than all of the promotions to buy Forex products. What's the deal?
T.P. Brunswick Maine


Answer Marc Charles:

I know the promos for Forex trading products make it look easy.

Obvioulsy some products are better than others. But you cna teach yourself without every spending a dime on so-called trading secrets or strategies.

However, it's nice to have some help, insight or real street smart insight for ANY business, including trading Forex. So don't rule out every program, book or newsletter, especially if its written and developed by a seasoned professional.

But yes.....the FOREX market is a $1.8 TRILLION waterfall of CASH!

I’ll show you a simple way make money trading the Forex markets in a second.

But first, a little background ...

The FOREX market demands the attention of any entrepreneur who wants to participate in the largest electronic marketplace in the world.

Banks, governments, drug kingpins, ex-patriots, international corporations, sheiks, kings, and speculators all participate.

Traders of every size, shape, color, and educational background can generate enormous profits in this market.

FOREX – or “FX” – stands for Foreign Exchange. It is the largest and most liquid financial market in the world – 30 times larger than all the U.S. equity markets combined.

“Foreign exchange” is the simultaneous buying of one currency and selling of another – the Euro/U.S. Dollar (EUR/USD), for example, or the U.S. Dollar/Japanese Yen (USD/JPY).

Yes. You can make money with Forex, and I think it's a legitimate business opportunity.

But the "rub" as they say....is the learning curve, which although fairly simple, it's not always easy for everyone.

As for the products on Clickbank...I know there's a boatload of them. I've reviewed several of them. The only ones I would give a B+ would be Forextrino Click Here!, Forex Robot Click Here!, and FX Automny Click Here!.


The Ultimate FX Predictor is really good too. I was contracted to work on the US promotion, so I'm biased. It's pricey too....but not everything good is cheap. Check it out here: http://www.tufxp.co.uk/

I hope that helps!

Regards,


Marc Charles

Saturday, December 15, 2012

Pawn Shops in This Economy

Question: Hi Marc. Thanks for your insight and for this blog...I love it. I know you've talked about pawn shops and cash advance stores. But are these a viable business in a depression? It seems pawn shops in my area are going out of business in droves. Thanks.
T.B. Boston MA


Answer Marc Charles:

If you Google me you’ll see I’ve been talking about the viability of pawn shops for a long time.
But more important, pawn shops can be very profitable in a Depression.

Have you seen Pawn Stars on History Channel?

If not, you should!

It’s a great show….and you can learn the “essence” of how to make money with them.

Making money is the key. Most pawn shops are either broke, saddled with debt or both.

Pawn shops can be an excellent source of income in a depression.

I’m not kidding.

What’s more, I made an amazing discovery about this market.

First let me warn you ……

Most of the pawn shop franchise opportunities available today are over-hyped and overpriced!

The best way to approach this business is to build and form your own brand…and franchise if you plan to expand.
But I found one franchise which may be worth a look.

First off….

I like the concept of a “franchise.”

Franchising can be applied to hundreds of markets and products. Franchising your product, service, or business is a great way to build a fortune.

Will Wright applied franchising to his software game The Sims in 2000, and the rest is history. The Sims franchise recently hit the 100 million units sold. At $39 a pop that’s a nice payday.

On a smaller scale, one-store franchises like The Mail Box Stores can be profitable too.

Sometimes you can acquire an existing franchise and hire someone to run it for you.

The Golden Rule of Franchising: Tap into a Rising Trend


When it comes to successful franchising it’s all about flowing the rising trend.

Trends are constantly changing and some are longer than other.

A hot franchise ten years ago could be history today when the trend is toast.

Pawn shops and cash advance stores tap into hot rising trends.

eBay Drop-Off Franchise Bites the Dust

You probably noticed a business trying to tap into a hot rising trend – the eBay drop-off center.

The business caters to people who understand the concept of eBay but do not have the time post, sell and monitor eBay auction listings.

ISold It on eBay was a franchise designed to help people sell stuff on eBay for a fee.

EBay drop-off centers may be a rising trend but not in the current form.

Most eBay drop-off centers today are riddled with problems, ridiculous up-selling fees (like $19.95 to change photographs or images) and excessive shipping charges.

But the concept of “eBay drop-off center” within an established company or franchise should do well.
An eBay drop-off center is not technically a pawn shop.

An eBay drop-off center differs from a pawn shop in a couple of ways. The main difference is immediate cash.
If you’ve never been to a pawn shop (or eBay drop-off place), let me explain.

When someone walks into a pawn shop they usually want cash for the items being sold (or a discount on an item they want to purchase).

An eBay drop-off center is more of a consignment agreement – people receive money IF and WHEN an item sells on eBay.

The Cash America Franchise Opportunity

Make no mistake about it, pawnshops can be very profitable.

I’ll show you the numbers.

The “pawnshop business model” has existed in one form or another for thousands of years. It’s certainly been around longer than most blue-chip companies.

Ten years ago, most people wouldn't be caught dead in a pawnshop.

If people needed cash they would just borrow from a relative, get a cash advance on a credit card, or tap into the equity in their homes.

But today the old methods for obtaining cash are drying up.

In other parts of the world, like Mexico, China and India, pawnshops are a common way of doing business.

There are more than 2,500 pawn shops in Mexico today, and the market is growing like wildfire.

Value Pawn and Jewelry in Orlando opened their first pawn shop in Mexico last year.

In the U.S., pawn shops are becoming an acceptable way of getting cash for every income level. The attitude is changing.

If you like the concept of a pawn shop, then a Cash America franchise may be worth considering... for several reasons.

The concept of an upscale pawn shop hasn't caught on with consumers yet.
The trend, though solid, is in its infancy.

But in most cases it will mean the franchises, like those offered through Cash America, are not overpriced (yet).

What the Heck Is a Cash America Franchise?

A Cash America franchise is a local store that provides a simple and convenient way for people to get cash for the items they own.

Customers can sell thousands of different categories of products and items to Cash America on the spot.

Cash America is also a great source of quality pre-owned merchandise such as computers, jewelry, home electronics, gold, video game consoles, sporting goods, tools, and even cars and motorcycles.

Cash America has reinvented the pawn industry with its modern buildings and business practices.

Most people will not be ashamed to walk into a Cash America store.

Cash America is a leader serving the needs of the under-banked community in the United States.

The members of this community don’t have access to “mainstream” financial services offered by banks or credit card companies.

They include lower income folks, immigrants, people that have recently gone through bankruptcy, and others. Some experts put this community at nearly 15 percent of the country’s population.

That’s a lot of potential customers, and despite what you may be thinking, they can be very lucrative customers.
Cash America more than 500 locations nationwide, and the company appears to be growing. The current owners (franchisors) also seem to be happy.

How Much Does a Cash America Franchise Cost?

The cost of opening a Cash America store will vary, depending upon the size and location. But start-up costs are between $200,000 and $300,000.

I know…….I try to avoid business opportunities with huge start up costs like this.

But we’re talking about a franchise with an established, recognized company in a hot rising trend.

I’m more accommodating when it comes to investing this kind of money in a viable franchise that is positioned in a rising market.

How Much Money Can I Make?

Oh yeah, it’s all about the money!

The amount of money you make with a Cash America franchise (or any pawn shop for that matter) will depend on your location and how efficiently you run your business.

Another consideration will be employee costs, and whether or not you want to be an absentee owner.
The most successful Cash America franchises are located at busy intersections, and are typically a short drive to major interstate highways.

Most franchise owners rent or lease retail space in popular strip malls or shopping locations. However, dozens of Cash America franchise owners choose stand alone locations.

From my research, I’ve found that most Cash America franchises have much higher cash flows and lower operating expenses than a typical fast-food franchise.

For example, let’s say a typical Cash America franchise in Las Vegas generates $650,000 in sales per year, with operating expenses (rent, employees, insurance, legal, etc.) of $250,000. This would leave a net profit of $400,000. Not bad.

On the other hand, if a typical Subway franchise at the same location generates $650,000 in sales, the operating expenses (including food costs) will usually be in the neighborhood of 70 percent to 80 percent.

If the operating expenses for the Subway were 75 percent, that would mean $487,500. The net profit works out to be only $162,500!

What’s more, I think the employee requirements and turnover would be much less with Cash America.

If you think that’s great, listen to this…

The Cash America profit margins will smoke most restaurants (and even most franchise opportunities). Profit margins on some items and loans can be as high as 50 percent.

The profit margins for a sub shop or a pizza restaurant can be as low as 8 percent.

Can I Sell the Stupid Thing If It Doesn't Work Out?

It’s relatively simple to unload a profitable franchise quickly if things don't work out as planned.
But, the current economic climate favors buyers.

A friend of mine tried to sell his pizza shop on a semi-popular beach for more than two years. He finally unloaded it at a deep discount.

I think a Hungry Howie’s pizza shop franchise at the same location would have sold much sooner, and without the need to extend a discount.

If a franchise has a trusted brand people know and love, selling it will be much easier. Selling into a hot rising trend is also easier than selling into a sinking, dying trend.

Think about it this way: Being an entrepreneur means taking calculated risks. If you can do this before the masses jump on board you could invest less money and make yourself a fortune.

I hope that helps!


Regards,


Marc Charles

Monday, December 10, 2012

Buying a Restaurant

Question: I know what you've said about restaurants and nightclubs. But I've found two opportunities which appear to be sound. In both cases I would own the properties outright (no mortgage). I would hire seasoned general managers with profit share agreements only. Both locations have been profitable since day one (I conducted separate audits). Please send me your thoughts.
R.W. Phoenix AZ

Answer Marc Charles:

Thanks for your note and question.

It sounds like you've done your homework. Way to go.

I like  your strategy of owning properties outright and hiring seasoned GMs with profit share agreements only. That is the best strategy in my opinion.

But I would still try and talk you out of owning a restaurant. Restaurants are like boats....you love buying them but can't wait to sell them!

On top of that, there are some places I would NEVER open a restaurant, California, MA, and NY to name three, I think AZ and TX are better.

 I realize a lot of people are making money hand over fist with restaurants in prime locations. But I couldn't stand the regulation, red tape, taxes, fees, fines, police state, franchise board, etc. etc.

If I can't persuade you to change your mind.....or invest in resturant groups or ETFs, then consider this approach............................

Restaurants and nightclubs are the hardest businesses to launch and run profitably.

Why? 

Because the overhead costs can kill you.

If you want to open a restaurant, you have to contend with staff salaries, inventory, inspections, unions, utilities, property taxes, licenses, heating and cooling systems, insect protection, trash removal, and certifications ... to name a few.

These are serious expenses. 

More important, these are expenses that most restaurateurs ignore - or grossly underestimate - until it's too late.

But you can make money hand over fist in the restaurant business.

Obviously, not every restaurant fails. But most of them do.

If you're thinking about opening a restaurant, here are three simple things you can do - and it will cost you less than $75:
1. Watch reruns of The Restaurant (if you can) - a series showing what Rocco DiSpirito went through opening a restaurant in New York City. The show has been cancelled, but reruns are still around.
2. Subscribe to Nation's Restaurant News. This is considered "the bible" for restaurant owners and professionals.
3. Play The Restaurant Empire game on your PC. You'll love it, your kids will love it, and your spouse will love it.
My fascination with the restaurant business began in high school. I was the youngest general manager for a hot Mexican casual dining franchise. (Unfortunately, this franchise had to file for bankruptcy as a result of a hepatitis outbreak that killed several customers and made hundreds of others very sick.)

What's more, I have four friends who opened restaurants over the past 12 years. All of them failed - except one. (And he's miserable.)

Interestingly, the failure of most restaurants rarely has anything to do with the food. In most cases, the failure is due to out-of-control overhead costs, the inability to find quality people who stay put, ineffective direct marketing, and the ego of the owner/chef.

Most of the owner/chefs I've talked to opened their restaurants so they would be admired by the press and their customers - not to make money. Maybe it shouldn't be called a "business" if making a profit is not the goal.

If you watch The Restaurant with Rocco DiSpirito, you'll get a sense of what I'm talking about.
Rocco is a lot of fun to watch. And he may be one of the greatest chefs that ever lived. But his pride and ego blinded him to the principles that make restaurants profitable. 

His constant squabbles with the partners who were providing the capital reveal his lack of business savvy.

Rocco knew very little about risking capital (prior to this experience, he never owned a business) - and even less about leading a team of qualified (high-spirited) professionals.

Anyway, if you're still motivated to open a restaurant after being exposed to the downside - and if you have sufficient capital - consider a top-notch franchise instead of trying to do it "your way."

6 Benefits of a Quality Restaurant Franchise for Start-up Entrepreneurs

Based on my research and hands-on experience, here are the top 6 benefits of purchasing a quality restaurant franchise. The franchise provides you with:
  • cost-control expertise
  • marketing expertise
  • systemized personnel training
  • intense demographics research
  • back-office technology and expertise (for dealing with payroll, vendors, and insurance)
  • research and development (concerning food and dining trends)
Here's an idea of what some restaurant franchises will cost you:
  • McDonald's - $500,000 to $1,000,000
  • Carvel Ice Cream - $75,000
  • Chester's Fried Chicken - $70,000 to $395,000
  • Dunkin Donuts - $500,000
  • Buffalo Wild Wings - $500,000
  • Captain D's Seafood - $450,000
  • Figaro's Pizza - $95,000
  • Blimpie Subs - $25,000
  • Huddle House Restaurant - $250,000 to $500,000
  • Burger King - $100,000 to $350,000
Another thing to keep in mind is that restaurant trends are always changing.

You've probably seen this in your neighborhood. The No. 1 fast-food chain today may be tomorrow's laughing stock. One bad marketing decision or health issue can sink an entire operation.

Fifteen years ago, a Burger King franchise was considered the "hottest ticket in town." These days, Burger King can't unload stores fast enough.

Trying to predict which fast-food brand will be the "hot ticket" 10 years from now is almost impossible. However, one way to identify profitable restaurant trends is by watching where the "big money" is being invested.

A "big money" restaurant operation like Brinker International (Chili's, Macaroni Grill, Maggiano's, On the Border, Rockfish, Corner Bakery) is a good example.
Brinker International is one of the largest and most successful restaurant franchises in the world. 
They own more than 1,600 units and have more than 140,000 employees. For the past five years, Forbes magazine has listed Brinker among the "400 Best Companies to Work For."

I think franchises are a great alternative when you're starting out in the restaurant business - even if you have a "name" as a chef and are tempted by the idea of franchising your brand ... like Tony Roma and Emeril Lagasse did.

The purpose of Profit Center Dispatch is to identify legitimate business opportunities and show you  HOW to make them profitable.

And when it comes to restaurants, your best bet will be a solid franchise that has identified a rising trend.

By the way, there are hundreds of non-food-related franchises too. And most don't require nearly as much capital.

So while you're investigating restaurant franchises, you might want to check out some of these:
  • Meineke Car Care Centers - $65,000
  • Valpak Direct Marketing System - $5,000 (15,000 households)
  • 1st Propane - $10,000
  • Sona Laser Hair Removal - $200,000
  • SuperCuts - $30,000
  • Friendly Computers - $50,000
  • AccuTax - $10,000
  • CashPlus - $75,000
  • Regis Salons - $50,000
  • Ice Cold Air (discount auto repair) - $75,000
  • Lil Pals Mobile Pet Photography - $20,000
  • Ace Cash Express (Kiosk) - $15,000

If you're determined to open a restaurant, consider viable franchise opportunities.

Watch the major money restaurateurs. Where and what type of restaurants are they building today?

Do your research and then talk to current owners or former owners of the operations you're interested in. You may not hear what you want to hear, but it'll give you a great perspective on the reality of this business.

The main benefit of owning a legitimate franchise is that you will have an established brand. The next-best benefit is that you will be taking advantage of time-tested marketing. This could save you tens or even hundreds of thousands of dollars by avoiding the serious pitfalls and marketing blunders of most "go it alone" restaurateurs.

Morel Resources for Restaurant Franchises:

Additional Resources for Non-Food Franchises:

I hope that helps!!

Send me your thoughts.

Regards,

Marc Charles

Tuesday, December 4, 2012

Most Restaurants are a BAD Idea by Marc Charles

 Hi Gang:


One of my subscribers wanted some insight on opening a restaurant. This is my two cents

This from a reader.....


Question: We have a successful restaurant in a busy metropolitan area. However, we’ve seen a drop off in year-over-year sales. We’re nervous about the economy and have considered selling the business. But this is the only business we know. Would you sell the business and start over in a new business, in a new area, in THIS economy?                                          
A.B. Fort Collins CO


Marc Charles:  

There are too many variables for me to comfortably recommend selling or keeping your business in this economy. You’ve seen a drop off in sales. I think the drop off will continue.

If we enter a full fledged depression the businesses with massive overhead, debt loads, and declining sales will be the first to go. I’m sorry to say but restaurants are always the hardest hit.

However, I took my kids and two of their friends to dinner recently at a fun family restaurant in Rockport Maine. The restaurant was packed to the gills! People were laughing (maybe quietly crying inside) and kids were playing video games in a small arcade, and running all over the place.

It seems restaurants with a passion for great service and reasonable prices often find a way to make money in difficult times.

Nine restaurants in the same geographic area (Midcoast Maine) have gone out of business the past 18 months.

I know you said your restaurant was successful but is it profitable? Is the overhead manageable? Do you own the property outright? If not, you may be headed for trouble.

The bad news is there are probably hundreds of restaurants (maybe a thousand) for sale in your city.  Will you be able to sell your restaurant? That is one question to ask yourself.

The good news is you can always start a business on the side and get it going until your restaurant is sold.

Another thing to consider is starting a restaurant in an area with fewer encumbrances and expenses….like small town America, the exurbs or even outside of the US.

Look.....in my experience, restaurants are not a good idea in most cases.  Most of us hate chain restaurants, and owner/chefs always criticize them. But the truth is chain operators (like Brinker International) know how to make money with restaurants....plain and simple.


I'm not recommending buying a franchise or chain restaurant. But rather we need to study and copy the "formula" they use to make boatloads of money.


Yes.....you can have a successful restaurant, refuse to compromise (buy local organic food and produce for instance) and make a comfortable profit (as opposed to boatloads of money).


But, I still recommend watching and maybe even work in a wildly successful restaurant. Most of the people I know who have opened restaurant think they've got all the answers, and they feel they are "above" franchises and chains. But in MOST cases they have failed miserably.


I hope that helps.


Your humble host.........


Marc Charles