The usual methods of fundraising for a trader are as follows:
1- Use your own funds. You may have save up from working, from other investments or basically from mom and dad (inheritance).
2- Bank loans or any other loans.
3- Friends and family.
4- A prop firm with all sorts of entry requirements and rules.
5- Got hired as a trader with a salary and clauses on profit sharing and bounces.
6- Advertisements attracting investors (very risky).
Any more ways? That's all I can think of right now.
There is one more way and that's what I am going to discuss right now but it is conditional.
The first condition is that you are absolutely a winner trader. No if's and but's. There should be no doubt whatsoever that you will generate a positive return. If your track record or ability to make money is sketchy or inconsistent or still subject to huge variances, then this method is not for you at all.
That is the lone most important factor in making this method work. Everything else might be able to be worked out with a bit of ingenuity but without you as a trader generating a guaranteed return percentage, the idea is DOA.
So, now if you are absolutely certain that you are a winner for sure, you have to decide what your percentage gain is. It should be decent enough to at least cover your expenses of implementing it. If you just break even after all the work, then it's not really worth bothering with.
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Now the method:
You need to sell something. A physical object that can not be replicated and faked. You sell it and you buy it back. You sell it at $X and buy it for $X+Y.
Yes, you pay an extra amount to buy back the original item and that is how you raise money. Lost you yet?
Here is an example:
You paint a little painting. Doesn't have to be big at all. The size of a postcard will do. You frame it and that is your product. It could be a happy face on a small canvas. It could be an X or anything abstract. It doesn't matter. It is your art and you are selling it for let's say $100.
No one can question your motives for making a painting and selling it. In fact you are so confident that this purchase was such a good idea for the buyer that you are willing to buy it back for twice they paid in one year from now. You guarantee that you will buy it back in a year for $200.
If they think you are lying, they don't have to purchase the painting. Right?
Is there anything illegal about this so far?
I know it isn't because i did purchase a very beautiful print (not the original) from an artist who had a shop in a touristy part of the town. He had set the repurchase price at par. In other words, if you are not happy with your purchase, bring it back in a year and I will refund you. I never returned it and passed it to my son. The print is about 25 years old now.
The only issue you have is that you don't want it to be faked. All I can think is to embed a microchip in the frame to make sure it stays authentic. In that case you are actually selling the microchip with certain data that you have put in and can only be accessed by you. If the microchip is gone or the casing is tampered with, then the item is spoiled by the buyer and basically worthless.
We assume the picture hasn't been tampered with and has stayed in it's original shape for a year.
Now the customer comes back after a year to see you purchase the painting back as you promised. By all means, you pay the customer $200 and take the painting back and decommission it or reprogram the microchip and have it for sale again.
So, you understand what happened now?
You raised $100, you made god knows how much....maybe 500% off that $100 and now you have $600. You keep $400 and give the customer $200.
Soon, the word of mouth will travel and you will have lineups around the block for your paintings. People will be willing to give you their money and sign any sorts of contracts you put in front of them as long as you are able to fulfill the terms of the contract.
Like I said, you have to be able to make money.
If you can make say 20%/year, you are not going to offer to pay 200% for the painting when they bring it back. Maybe you will have to offer 5 or 10%. The lower the offer, the lower the enticement value for anyone to want to buy the painting and vice versa. When I bought that artist's print, I absolutely loved it and was horrified at the thought of returning it for a refund. Even today i wouldn't. That is because it was beautiful and worth the money. Your painting however, with the happy face or whatever, I doubt will carry the same charm...no offence. That's why you will have to offer something substantial to entice a transaction.
Well, what do you guys think?
Can you be arrested or at least stopped before your first attempt at giving a refund for your painting? That means are there any laws that prevent a person from making a promise to repurchase an item at a higher price?
If you sold only one painting and you didn't make money with that $100, you can easily save yourself from trouble and dish out $200 to buy the painting back. No harm, no foul. However, if you sold so many that you can not cover all the buy back coming at you...well, you are in trouble.
This is something that has to be thought out in depth. The first year, you may have to limit your sells. 10 painting, $1000 raised and invested, but you have to have $2000 sitting in the bank in case you fail.
Of course you can't go on like that and have your safety net sitting in the bank in case you fail. As I have said a few times already, this entire thing hinges on your ability to fulfil. What I am wondering is given that ability to make money, is there anything wrong with this plan or how else can it be improved?
1- Use your own funds. You may have save up from working, from other investments or basically from mom and dad (inheritance).
2- Bank loans or any other loans.
3- Friends and family.
4- A prop firm with all sorts of entry requirements and rules.
5- Got hired as a trader with a salary and clauses on profit sharing and bounces.
6- Advertisements attracting investors (very risky).
Any more ways? That's all I can think of right now.
There is one more way and that's what I am going to discuss right now but it is conditional.
The first condition is that you are absolutely a winner trader. No if's and but's. There should be no doubt whatsoever that you will generate a positive return. If your track record or ability to make money is sketchy or inconsistent or still subject to huge variances, then this method is not for you at all.
That is the lone most important factor in making this method work. Everything else might be able to be worked out with a bit of ingenuity but without you as a trader generating a guaranteed return percentage, the idea is DOA.
So, now if you are absolutely certain that you are a winner for sure, you have to decide what your percentage gain is. It should be decent enough to at least cover your expenses of implementing it. If you just break even after all the work, then it's not really worth bothering with.
-------------------------------------------------------------------------------------------------------------------------
Now the method:
You need to sell something. A physical object that can not be replicated and faked. You sell it and you buy it back. You sell it at $X and buy it for $X+Y.
Yes, you pay an extra amount to buy back the original item and that is how you raise money. Lost you yet?
Here is an example:
You paint a little painting. Doesn't have to be big at all. The size of a postcard will do. You frame it and that is your product. It could be a happy face on a small canvas. It could be an X or anything abstract. It doesn't matter. It is your art and you are selling it for let's say $100.
No one can question your motives for making a painting and selling it. In fact you are so confident that this purchase was such a good idea for the buyer that you are willing to buy it back for twice they paid in one year from now. You guarantee that you will buy it back in a year for $200.
If they think you are lying, they don't have to purchase the painting. Right?
Is there anything illegal about this so far?
I know it isn't because i did purchase a very beautiful print (not the original) from an artist who had a shop in a touristy part of the town. He had set the repurchase price at par. In other words, if you are not happy with your purchase, bring it back in a year and I will refund you. I never returned it and passed it to my son. The print is about 25 years old now.
The only issue you have is that you don't want it to be faked. All I can think is to embed a microchip in the frame to make sure it stays authentic. In that case you are actually selling the microchip with certain data that you have put in and can only be accessed by you. If the microchip is gone or the casing is tampered with, then the item is spoiled by the buyer and basically worthless.
We assume the picture hasn't been tampered with and has stayed in it's original shape for a year.
Now the customer comes back after a year to see you purchase the painting back as you promised. By all means, you pay the customer $200 and take the painting back and decommission it or reprogram the microchip and have it for sale again.
So, you understand what happened now?
You raised $100, you made god knows how much....maybe 500% off that $100 and now you have $600. You keep $400 and give the customer $200.
Soon, the word of mouth will travel and you will have lineups around the block for your paintings. People will be willing to give you their money and sign any sorts of contracts you put in front of them as long as you are able to fulfill the terms of the contract.
Like I said, you have to be able to make money.
If you can make say 20%/year, you are not going to offer to pay 200% for the painting when they bring it back. Maybe you will have to offer 5 or 10%. The lower the offer, the lower the enticement value for anyone to want to buy the painting and vice versa. When I bought that artist's print, I absolutely loved it and was horrified at the thought of returning it for a refund. Even today i wouldn't. That is because it was beautiful and worth the money. Your painting however, with the happy face or whatever, I doubt will carry the same charm...no offence. That's why you will have to offer something substantial to entice a transaction.
Well, what do you guys think?
Can you be arrested or at least stopped before your first attempt at giving a refund for your painting? That means are there any laws that prevent a person from making a promise to repurchase an item at a higher price?
If you sold only one painting and you didn't make money with that $100, you can easily save yourself from trouble and dish out $200 to buy the painting back. No harm, no foul. However, if you sold so many that you can not cover all the buy back coming at you...well, you are in trouble.
This is something that has to be thought out in depth. The first year, you may have to limit your sells. 10 painting, $1000 raised and invested, but you have to have $2000 sitting in the bank in case you fail.
Of course you can't go on like that and have your safety net sitting in the bank in case you fail. As I have said a few times already, this entire thing hinges on your ability to fulfil. What I am wondering is given that ability to make money, is there anything wrong with this plan or how else can it be improved?