Two must-know strategies to stay in business
Bill is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
You learn a thing or two from looking at hundreds of portfolios a year.
Aside from the stocks and bonds, puts and calls, and other investment strategies, there are two things everyone should know about assets, but very few do.
First, you are probably paying too much for your property taxes. One hapless San Diego property owner dutifully paid his property taxes every year and hardly looked at the bill. This year, he looked: The county wanted to tax him based on the $600,000 that county bureaucrats said his condo was worth.
But this property owner had put his condo on the market the year before and got nary a nibble when he listed it for half of that. That's a $3000 difference in what he paid in property taxes, and what he should have paid. This person should have known better. After all, he he does look at hundreds of portfolios a year.
Now he does.
The second thing I see from many of my clients who are small contractors in the building trades: Carpenters, plumbers, electricians and the like. It is no secret that the financial tsunami of 2008 ruined many of these companies.
Others sought new clients in the only place where new clients had money: Government jobs. Many of the jobs were created with federal money that was supposed to go to the small business owner, such as them. But there was -- is -- a catch. The contractor had to be bonded. And he had to have working capital.
Getting a bond today is less like applying for car insurance and more like getting a line of credit. If you want to build a $1 million solar installation for a local government, you have to have a $1 million line of credit.
A bond: That ensures you complete the job and pay your subcontractors and vendors. All over the country thousands and thousands of contractors went out of business because they could not qualify for a bond. In Louisiana, the federal government is spending billions on Post-Katrina distaster relief (still!). But it was always supposed to be a doubled edged relief effort: Fix the damage; hire local contractors.
Because of unusually strict bonding requirements, almost none of the work is going to the small, local contractors. But apparently that is changing: One of my clients told me about a company name Ox Bonding. They write surety bonds and issue working capital based on a company's ability to do the work -- not its credit score.
I checked them out. Turns out the company was started by a guy whose dad had the same problem: A small contractor who could not bid on bigger jobs because he could not get bonded. Could not get working capital for bigger jobs. The secret sauce of this relatively new company is this: Their underwriters are veterans of the construction business. Not accountants.
Before they give anyone a bond or working capital, they look under your hood, check your books, talk to your customers, and make sure you know what you are doing. No credit score. To reduce their risk, they control the funds.
They also offer working capital. A contract to paint city hall has no value if you cannot buy the paint and pay the painters. But don't even think about asking your bank for that -- even with contract in hand. They just won't do it.
Ox Bonding does. And that is saving companies around the country.
Helping a contractor get working capital also improves the contactors ability to negotiate better deals with their vendors. Say you bought $50,000 worth of paint, with terms that you get 2 percent off if you pay in ten days.
Ox Bonding will call the vendors and offer to pay right away in return for a bigger discount. Its amazing how much money people save on just that.
New ways to get working capital and bonding are a very big deal that every small contractor who wants to get bigger jobs should know about.
Now folks who thought they were going out of business are competing for and winning multi-million dollar bonds.
A lot of people don't know about these must-know strategies reducing their property taxes, getting a surety bond, or finding working capital for small contractors
But this information can save your house. Or save your business.
Now you know.