RW's perception of entrepreneurs & business men

[Gator]

I am a retired businessman/entrepreneur.  Many may claim to be a businessman, yet I assert that you are not a real businessman until you must assign your home as collateral when obtaining a loan to meet payroll, i. e. going "all in."   That is the true litmus test.  I am not certain that RW, who seem so concerned with security, would consent to such.   
 
Shadow's comment about "honesty" at face value is wrong; however, I assume he is talking about the RW's perception. 
 
My business was a partnership.   In contrast, Russian businesses seem to be run by one strong man.  We started with three partners and when I retired we had hundreds.  When retiring and moving to Florida, I met many other businessmen from different professions and businesses.  I was shocked when hearing the stories of how many were mistreated by their own partners.  In contrast my partners' were unquestionably honest with a couple of exceptions, who were promptly removed.
 
We had three goals:  provide quality service to our clients, receive a high yet fair return, and have fun.  My employees when cranking out a proposal at 2 am would often ask me, "When does the fun part start."  My answer, "This is the fun part."  Many stayed and eventually became partners, carrying on the tradition, enabling us to make the INC 500 for many years.

[TheTraveler]

big ups to you, gator!

thanks for sharing!

[Manny]

I am a retired businessman/entrepreneur.  Many may claim to be a businessman, yet I assert that you are not a real businessman until you must assign your home as collateral when obtaining a loan to meet payroll, i. e. going "all in."   That is the true litmus test.

I disagree.

I would say that if you need to use borrowings to pay the staff then you are doing something wrong and your cash-flow is insufficient. If you are so indebted that you must use your house as collateral, that means the bank doesn't trust you and/or the business has zero assets.

Conducting business with no assets and paying salaries using borrowed money is not business; it is gambling. And we saw what happened because of that already didn't we?

I have never had to borrow money for business. I don't mean to pay salaries; I mean ever. I have zero business borrowings. Using your litmus test, I am not a 'real businessman'. Yet I am pretty sure I could borrow money if I wanted to without needing to use our main home as collateral.

Willingness to gamble ones primary home is not a fair litmus test of being a businessman.

[Gator]

I would say that if you need to use borrowings to pay the staff then you are doing something wrong and your cash-flow is insufficient. If you are so indebted that you must use your house as collateral, that means the bank doesn't trust you and/or the business has zero assets.

What can I say?
 
Some small businesses can be operated using a cigar box for accounting, especially slow growing businesses.  I am not saying that is you.  I am simply contrasting businesses with major plans which need to borrow money in the startup phase.  And bank loan committees will insist upon compliance with their covenants.
 
Please sit down and do some quick calculations for receivables, working capital, cash flow, etc. associated with a business doubling each year, year after year.   And then there are the inevitable periods when reality does not equal plans.
 
Zero assets?  In a rapidly growing professional service business the employees are the assets.  They want to be paid in cash, not  "receivables." 
 
 
Nevertheless, you are correct that once a business has established a good track record, lenders will accept something such as receivables in lieu of the equity in the partners' residences.  Besides, the business if successful will dwarf the value of home equity of the owners.

I have never had to borrow money for business. I don't mean to pay salaries; I mean ever. I have zero business borrowings. Using your litmus test, I am not a 'real businessman'. Yet I am pretty sure I could borrow money if I wanted to without needing to use our main home as collateral.

Great.  However, rapid growth requires money in most cases, except examples such as businesses that not require inventory and customers pay in advance.  Business models vary widely.  If you can provide the needed working capital organically, you are on your way.   We were able to do that after a few years, but still needed a line of credit to cover downturns, etc. 
 
I wish your business well. 
 
 

[calmissile]

I disagree.

I would say that if you need to use borrowings to pay the staff then you are doing something wrong and your cash-flow is insufficient. If you are so indebted that you must use your house as collateral, that means the bank doesn't trust you and/or the business has zero assets.

Conducting business with no assets and paying salaries using borrowed money is not business; it is gambling. And we saw what happened because of that already didn't we?

I have never had to borrow money for business. I don't mean to pay salaries; I mean ever. I have zero business borrowings. Using your litmus test, I am not a 'real businessman'. Yet I am pretty sure I could borrow money if I wanted to without needing to use our main home as collateral.

Willingness to gamble ones primary home is not a fair litmus test of being a businessman.

Your view of business does not comport with the traditional way small businesses are built in America.  Sure, you can start out of a cigar box with no employees such as an indedendent workman or a cusultant.  Traditional business that require employees and inventory cannot do it unless they have somehow saved enough money to finance themselves.

When I started my corporation, it was necessary to go what the banks call a 'bulk transfer agreement'.  It includes your house and anything else you own.  The banks are not going to loan money to someone without a proven business track record.  Anyone with a proven track record is less likely to need to borrow from a  bank anyway.

You are right about one thing.  It is a gamble and it is also part of the American spirit.  You take risks to succeed and if you are successful the rewards are very good.  In my business, after a few years it was necessary to have international letters of credit from the bank to pay in advance to foreign companies to manufacture my product.  There is no way to do that without borrowing (temporary) from a bank.

Once the original startup loan is paid off to the bank, it is only necessary to have a line of credit to cover cash flow durig daily operations and to pay the vendors while the customers work is in progress.  It is not much different from those that build large buildings. The owner gets a bank loan to cover the construction phase and pays it off when completed and he has it rented or leased.  It is how it is done here.  Also, you need to remember that typical business transactions are net 30 at a minimum which means you do not get paid until at least a month after the work is completed.
Try to enact a C.O.D. policy and you will discover soon how many of your customers you loose (especially corporate clients).  I tried it and had to go back to net 30.  Its a way of life.

For little dinky businesses loans may not be necessary.  For anything larger it is usually necessary.

[CDW]

I disagree.

I would say that if you need to use borrowings to pay the staff then you are doing something wrong and your cash-flow is insufficient. If you are so indebted that you must use your house as collateral, that means the bank doesn't trust you and/or the business has zero assets.

Conducting business with no assets and paying salaries using borrowed money is not business; it is gambling. And we saw what happened because of that already didn't we?

I have never had to borrow money for business. I don't mean to pay salaries; I mean ever. I have zero business borrowings. Using your litmus test, I am not a 'real businessman'. Yet I am pretty sure I could borrow money if I wanted to without needing to use our main home as collateral.

Willingness to gamble ones primary home is not a fair litmus test of being a businessman.

+1

Being in business does not necessary mean you have to borrow money!  I agree with Manny!!   I also have ZERO borrowings!

Gator, did you know that successful small shrewdest investors do not own any credit cards?

[Manny]

This clearly differs between types of business.

I understand both models of course, but I chose a safer route knowing the late 2000's downturn was coming way in advance.

I operate several businesses. In the main one, yes we hold stock, but it is paid for. We don't pay rent or mortgage; we own the building outright. We don't invoice later or offer credit at all. Ever.

I grew up in a family business environment where organic growth and self funding was the norm. I started with £1500 from Prince Charles in 1991. At age 21. Early on, I decided other peoples money was way too expensive, so never used it.

My point was that Gator's quote was incorrect. His method is one way; mine is another. Neither are wrong. But not needing/choosing to gamble the family home makes me no less of a businessman than he.

Picking up on CDW's comments above, I also have no credit cards, no car loans and no consumer credit at all. I wouldn't dream of financing any purchase (except property and always at less than 50%). If we want something, we operate a really simple principle that is mostly lost over the pond: If the money isn't in the bank, we don't buy it!

I am not saying Gator's and Doug's methods are wrong, they are merely different to what I choose to do. But I do call Gator's quoted statement above wrong. Often we can blithely make a comment, based only on our own experience, so no harm done.

[Noch1]

Don't have a credit card
You could not rent a car or book a hotel or motel without one.

As for business. If you want accounts for anything including the bank.
When starting and for many years later, you need to Guarantee it with your personal
name and signature. So maybe no using house, but if it is enough and it goes south on you.
You will be selling personal assets to cover it.
Each country is different.

As far as FSU women. I think it would depend on the women and how you describe your business
as to how they would react.

[Manny]

Don't have a credit card
You could not rent a car or book a hotel or motel without one.

Strangely enough, we visit the US most years, and we stay in hotels and rent cars with ease.

I will clarify, that in the US, that sometimes they insist on a credit card, my wife has one we hardly ever use. I think it has something daft like a £300 limit on it - she got it as a shiny new immigrant to help build her financial history. We only use it for the silly stuff in the US that they insist on a credit card for. It is useless to us in the UK. For some reason, the US doesn't understand debit cards.

Last year, we paid our US car hire in the UK in cash, and although they took an imprint of the card above at our hotel, I paid the extras bill in cash also at departure.

But I have been to the US many times before without a credit card of any type. Once I had to leave $500 at a hotel reception as security because I had no card. Car hire can be prepaid in the UK without a card at any travel agent.

Only the US is fanatical about credit cards in this way. Europe works mostly on debit cards. You guys still sign bits of paper with a pen when you buy something I think? Like we did in the 90's. Europe is all debit cards and chip and PIN now. The US is still stuck with credit cards, signing bits of paper and obscure cell phone frequencies that are out of kilter with anywhere else in the world.

[calmissile]

Strangely enough, we visit the US most years, and we stay in hotels and rent cars with ease.

I will clarify, that in the US, that sometimes they insist on a credit card, my wife has one we hardly ever use. I think it has something daft like a £300 limit on it - she got it as a shiny new immigrant to help build her financial history. We only use it for the silly stuff in the US that they insist on a credit card for. It is useless to us in the UK. For some reason, the US doesn't understand debit cards.

Last year, we paid our US car hire in the UK in cash, and although they took an imprint of the card above at our hotel, I paid the extras bill in cash also at departure.

But I have been to the US many times before without a credit card of any type. Once I had to leave $500 at a hotel reception as security because I had no card. Car hire can be prepaid in the UK without a card at any travel agent.

Only the US is fanatical about credit cards in this way. Europe works mostly on debit cards. You guys still sign bits of paper with a pen when you buy something I think? Like we did in the 90's. Europe is all debit cards and chip and PIN now.

Manny you are a little out of date.  I don't know about England, but we use debit cards much more than credit cards these days.  It simply deducts the purchase from what you have in your bank account.  There is also overdraft protection on some cards that will go to your credit card if needed.  About the only place I have not found a debit card to be accepted is car rental agencies.  Their stupid argument is that they are not going to loan you a $30,000 car if you only have $500 in the bank and no credit.  Nearly everywhere accepts debit cards, but of course you have to have the money in the bank at the moment to cover the full amount.

I have noticed in Ukriane that fewer merchants are accepting credit and debit cards.  They want cash!  Dont even care what currency.  LOL.

Your right, the business models are different bewteen Britian and the US.  Neither one is right or wrong.  I could never have started my original corporation without a bank loan.  Agreeing to a bulk transfer agreement was the cost/risk to get the loan.  It was well worth it in my case.  LOL

My former wife was from Brazil and she said that there were no home loans.  You had to have the full amount to buy a house.  I think that has been true in Ukraine until recently.  The 20% + interest rates are so high that you might as well wait until you have the money.  LOL

They are currently pushing consumers to get credit cards in Ukraine.  At that interest rate, I would guess they would.  My interpreter bought a laptop a couple of years ago on a new credit card she got.  She is still paying for it and said she will never do that again.  LOL

[Manny]

Doug, the situation you describe in Ukraine was the same in Russia and the Baltics five years ago. Now credit costs have fallen a little; and some people have leaned a lesson as you reported. But it is still mostly a cash society there.

On debit cards, in Europe, Maestro is the most popular one. I recall in the US that is unheard of. We must use the Visa debit system or Mastercard credit system over there. Which we have too. Very few in the UK have Amex or JCB or Diners. Same in Europe. I did manage to use my Amex in Moscow here and there though.

I always find cash much simpler when travelling. No calling banks ahead, cards not working or looking for ATM's. Money works everywhere.

[calmissile]

Doug, the situation you describe in Ukraine was the same in Russia and the Baltics five years ago. Now credit costs have fallen a little; and some people have leaned a lesson as you reported. But it is still mostly a cash society there.

On debit cards, in Europe, Maestro is the most popular one. I recall in the US that is unheard of. We must use the Visa debit system or Mastercard credit system over there. Which we have too. Very few in the UK have Amex or JCB or Diners. Same in Europe. I did manage to use my Amex in Moscow here and there though.

I always find cash much simpler when travelling. No calling banks ahead, cards not working or looking for ATM's. Money works everywhere.

Agree with you.  However I don't like to carry over $1000 of cash at any given time, so I use the ATM (debit card) and tap my bank account as needed.  Your right, most debit/credit cards in the US are administered by either Mastercard or Visa.  I have no complaints with either one of them.  When I was engaged, I got Walmart money cards and had one with her name on it and her own pin.  It was easy to put money on the card at any Walmart and she could use it at any ATM in Ukraine and draw out cash.  It was much cheaper than using Western Union and much more convenient for her.  I will probably do the same with my current squeeze.   LOL

[IAmZon]

Unbelievable none sense. Still living in the 90s? I personally know several businessmen and businesswomen in Russia. In fact we just had a house guest, my wife's friend who is a co-owner of a successful business in Moscow and makes more then an average doctor in the USA. And by the way she is a beautiful 29 yo single woman. Do they have to work with the system? Sure, but this doesn't make them criminals. The real criminals are the "system" - the ones running the country: the government, police, Duma reps, etc. And off course let's not forget the people who own big banks, insurance companies, real estate developers, etc. who went legit after they had acquired their wealth by being involved in criminal activities. But frankly they are not that different form some American elite families who also made their fortune on illegal activities, and later went legit. I guess it's the way of the world and not specific to Russia.

NICE!  Great weighty comment.  This is the reason a guy with your experience is valuable here.  The rest of us are like blind men in a dark room looking for the door.

[IAmZon]

GATOR, I have done it too!  Take the type of risks that would not be a mild set back, but cost years. 


That is the kind of thing that makes your eyes twitch.  That is the type of risks that, when it works, is worthy of GREAT returns.  Everything else (short of war) is more or less a matter of organization ... and women do this better than men.  There is nothing manly about being an accountant LOL

[jone]

 

I'm still waiting for the phone number of the beautiful 29 year old.  Hehehe.  Just kidding.  Ouch!  Stop that! 

[Noch1]

Strangely enough, we visit the US most years, and we stay in hotels and rent cars with ease.

I will clarify, that in the US, that sometimes they insist on a credit card, my wife has one we hardly ever use. I think it has something daft like a £300 limit on it - she got it as a shiny new immigrant to help build her financial history. We only use it for the silly stuff in the US that they insist on a credit card for. It is useless to us in the UK. For some reason, the US doesn't understand debit cards.

Last year, we paid our US car hire in the UK in cash, and although they took an imprint of the card above at our hotel, I paid the extras bill in cash also at departure.

But I have been to the US many times before without a credit card of any type. Once I had to leave $500 at a hotel reception as security because I had no card. Car hire can be prepaid in the UK without a card at any travel agent.

Only the US is fanatical about credit cards in this way. Europe works mostly on debit cards. You guys still sign bits of paper with a pen when you buy something I think? Like we did in the 90's. Europe is all debit cards and chip and PIN now. The US is still stuck with credit cards, signing bits of paper and obscure cell phone frequencies that are out of kilter with anywhere else in the world.

I am not in the US. Canada.
Last time I tried to rent a car without a credit card ( not pay) rent.
It took 5 company's, before I found one that would do it. $1000 cash deposit.
That was over 10 years ago. I had the notion, I did not need the card.
You can pay for anyway you wish, when done. They want credit card for several reasons.
Mostly, to be able to find you if you default. Or at least know who you are.
Hotels in this country, will charge your card, for room if you do not show up, etc.
Or do not cancel. with proper notice.

As for paying, I rarely use the card for this. But to book, standard practice.

[ML]

Credit cards are a great way to go . . . for disciplined and smart people.

Disciplined people always know where the money is coming from BEFORE they put something on a credit card AND they always pay off the credit card bill  within the 20 or so days allowed without any interest.

Smart people will obtain credit cards that give back a rebate of a minimum of  1% and 2-5% on some purchases during certain time periods.  This is just a simple and integral part of money management.  And they use the credit card for EVERYTHING possible, which is almost everything these days. 
For those who spend $30,000 - $150,000, etc., it makes for tidy bonus money.

How many of you, when bargaining for a new auto,  tell the salesman . . .
"I want to pay $1,500 more than you are asking?"

Yet,  some here are bragging that they willingly refuse to earn an easy $1,500 by refusing to use credit cards.

But, some are right here in their feelings about credit cards.
They are dangerous in the hands of idiots, financial simpletons,  and the undisciplined.

Three years ago, I bought an auto for around $37,000.
I handed them my credit card.
The salesman said:  We can't take this.
I said: Yes you can, in fact your Master Card agreement says you cannot refuse.
He goes to manager who comes back with him and says, you probably aren't authorized to spend that much.
I  said:  Run it through; I have a $100,000 credit limit.
He:  We can't do it because we have to pay 3% to MC and that is most of our profit in the transaction.
Me:  OK, how  much will you run through on the MC.
He:  How about $10,000.
Me:  OK;  Here is a check for $27,000 for the balance.

So, I  just picked up another $100 in rebate money.
And, I simply paid off the $10,000 credit card bill when it came through.

[Eduard]

I'm still waiting for the phone number of the beautiful 29 year old.  Hehehe.  Just kidding.  Ouch!  Stop that!

You don't want to get involved with her... she's got issues... in fact she is pregnant and the baby's daddy is married off course... maybe in the future she may consider an American. She is buying property in the US so will be visiting occasionally.

[LAman]

You don't want to get involved with her... she's got issues... in fact she is pregnant and the baby's daddy is married off course... maybe in the future she may consider an American. She is buying property in the US so will be visiting occasionally.

Out of curiosity Eduard, when a lady gets close to 30....the thought of having children comes to the forefront....haven't you seen this often?

[Eduard]

Out of curiosity Eduard, when a lady gets close to 30....the thought of having children comes to the forefront....haven't you seen this often?

Yes, it's true. The biological clock starts ticking louder and louder the closer to age 30 they get. Just as AW some RW decide to have a baby even though they are not in a committed relationship.

[LAman]

Eduard...I have found this quite often.
What I don't understand is that the FSU men would prefer a lady without children...yet the ladies still have children and not get married.

[Eduard]

Eduard...I have found this quite often.
What I don't understand is that the FSU men would prefer a lady without children...yet the ladies still have children and not get married.

I think that they decide to have a baby on their own because they just lose hope that they will ever find THE man of their dreams.

[IAmZon]

Getting back to the main point ...


Several years ago, I was "proud" to be an able man with many skills and capable of many business undertakings.   BUT, I did start to notice that with women in Latin America as well as women from FSU, they care much less about the process of building, accomplishing, and succeeding than AM.  They are much more concerned (almost only concerned) with the final product.


These are my observations.  Any one else has something to add?

[jone]

Noone appreciates skills as a businessman, except, of course, the businessman on the other side of a transaction.  The idea of marrying someone that is incapable of understanding how I make money and employ employees is beneath me.   It is the one inexcusable trait that will immediately make me discard a potential mate. 

One of the reasons that I actually have enjoyed this site is that many of the subscribers to this forum have displayed acumen that demonstrates a history of doing business.

As a matter of observation, most of the people who are entrepenurial  enough to explore Eastern Europe as a potential hunting ground for a mate have probably also been successful in other venues not related to international dating and marriage.  To those of you who know, I salute you.

[Manny]

Three years ago, I bought an auto for around $37,000.
I handed them my credit card.
The salesman said:  We can't take this.
I said: Yes you can, in fact your Master Card agreement says you cannot refuse.
He goes to manager who comes back with him and says, you probably aren't authorized to spend that much.
I  said:  Run it through; I have a $100,000 credit limit.
He:  We can't do it because we have to pay 3% to MC and that is most of our profit in the transaction.
Me:  OK, how  much will you run through on the MC.
He:  How about $10,000.
Me:  OK;  Here is a check for $27,000 for the balance.

So, I  just picked up another $100 in rebate money.
And, I simply paid off the $10,000 credit card bill when it came through.

The UK differs.

I would have simply refused your business if you insisted on paying that value by card, or added the 3% to your bill. I walk away from any and all dictatorial customers. Why would I be stuffed for a $1110 MC bill so some guy can make $100? Madness.

Here, people negotiate discounts for cash. It likely exceeds any rebate you might get by card usage.