All About The Numbers

Written by Jeffrey R. Armstrong – President/Owner of Armstrong Capital

Your favorite Master Note Buyer – Straightforward, Honest, Fair…

When you think about the cash flow and note industry the immediate thought that comes to mind is that it the business deals with lots of numbers, and you would be right!  Yes, the industry does deal with finance and business and lots and lots of numbers.  In order to be successful over the long term you will have to learn to embrace the numbers.  The numbers you have to come to grips with are not only the regular 0-9 digits, but also statistics as well as, I’m not afraid to say it, the numbers that you will compute using your calculator for analyzing,  negotiating and pricing a transaction.

Let’s start with statistics.  As you may or may not know I have a very refined note marketing plan with extremely defined and tested marketing methods.  Being considered one of the top currently practicing note marketers in the country I can tell you that marketing for notes is a HUGE numbers game.  If you expand into using the internet as part of your marketing plan then it turns into a GARGANTUAN numbers game.  For example, sending out 100 direct mail letters per month to targeted note holders for an entire year may only get you one closed transaction. However if you send out one thousand direct mail letters per month to targeted note holders you may get one to three closed transactions per month (all things considered equal). It is a numbers game any way you look at it.

Keeping accurate, up to date and concise statistics for each and every different marketing method is very important for the longevity of your business.  Keeping track of not only which marketing methods are producing quality responses and which ones are just generating the tire kickers and looky-loo’s.  Tracking times of the year, of the month and of the week also can open your eyes to when more or less responses come in from your marketing. For instance, August has traditionally been a very low response rate on direct mail for me so consequently I may not send a mailing out in August most years.   These numbers in the form of statistics can make or break your business and attention to detail in keeping these figures on a daily, monthly and yearly basis will definitely give you a good idea of whether or not your marketing methods and marketing plan are working efficiently.

Can you improve the numbers and your statistics by having excellent negotiating skills?  Communication skills?  Phone skills?  Sales skills?  Absolutely.  Yet, if you don’t have the numbers of proper marketing methods working for you to get the numbers of responses you need you will never have the chance to learn, practice and improve any of those skills.

In my over twenty years as a note broker and investor in the seller financed note business and my over fourteen years of educating, one of the most critical components of success has been overlooked by many.  As industry professionals we focus a lot on the marketing to get the numbers of potential deals coming across our desk.  Once that is working efficiently then we shift our attention to our negotiating ability and finally becoming proficient in due diligence and closing procedures.

          But somewhere in between the marketing and the closing the numbers need to be accurately accounted for, computed and laid out in such a way so that they can be simply explained to a note holder. That missing and almost forgotten component and crucial factor is… calculator skills.  Most people hear the word calculator and immediately get the feeling that they can’t be in the note business because they do not know how to use one.  The simple fact is that the calculator that we use and the things we need to do with the calculator are very simple.

In the beginning of our note businesses we learn to calculate out the payment amount and current balance. After working the business for a couple of months we find out we need to know how to calculate out a balloon amount. Then as more time passes we come across all different kinds of notes such as interest only, zero percent interest, long term, short term, high interest, low interest and zero down notes. From time to time we discover than knowing about wrap around notes, even payment notes and notes missing information come across our desk as well. If you are unable to calculate such notes and terms you will be seriously hindered.

As our businesses progress we continue to learn and grow our calculator skills by calculating remainders, partial interests, early payoffs, splits and much, much more.   The more we are able to calculate the better our negotiating skills become which increases our acceptance rate and in turn helps our businesses not only grow but survive as well.  Never underestimate the power of the numbers in this or any other business.  Calculator skills separate the forever beginners from the advanced note professionals.

Do yourself a favor, while this business has been very good to many it can only continue to be good by improving your use of numbers. I challenge you to use numbers even more by tracking your marketing efforts with statistics and refine your calculator skills for growth and survival. Know that being good with the numbers will make your message more appealing, give you the confidence to show the note holders that you have the solution to their problem and will help you show them that you have the right answers to their questions.

Remember, success demands action! Keep on marketing, it’s going to work! TWITA! (That’s What I’m Talking About!)