Ever since college (roughly about 3 years ago now) or maybe during college – I had ideas. Entrepreneurship ideas. Product ideas. And since a million dollars is a good, round number – and can earn you $60,000 a year in interest alone (before taxes darnit), I like it. And to this day, I’m still thinking up ways I can earn this much money – doing something.
So I entitled my ideas/partial dreams “Million Dollar Ideas”. And they’ve followed me everywhere. Michelle/Friends/Coworkers get to listen to them any time I come up with something. Of course I’ll never pursue them – because:
1) They’d take too much time. I don’t have the flexibility to just quit my job and take a risk like that.
2) Most of them require a million dollars to start with – just general investment capital for R&D and product development/patent/business application.
3) Rarely do I come up with an idea/product that has a lifespan of longer than 3-5 years. Sadly enough, I’d like to not be categorized with the “Pet Rock” and “Silly Putty” guys (no offense, I bet both of you are enjoying your millions…)
4) In general, I’m just too lazy. And typically, my coworkers aren’t too lazy to point out that the product has already been created – or the unlawful side of my business ideas. In my opinion it really takes someone who is very driven (and has very little to lose) to start a successful business. And I’ve heard crazy things like “90% of first time businesses fail”. I can’t take that risk with two mortgages currently hanging over my head.
So I know that this can’t be a reality – it’s still nice to day dream – and who knows, maybe one day I’ll come up with an idea that flies in the face of all my own – and others nay saying.
I remember one of my very first “million dollar ideas” – and still think it is a good idea – although I saw the product in Brookstone store (or whatever those stores are) about 4 years ago (I had this idea in late 2001). It came about when I had to get up for a 9:30 class the next morning (man I used to think 8:00 am was early – boy was I wrong), but my roommate and his friends were out in the family room playing video games – and obviously making a lot of noise to go along with it.
I’m a light sleeper – so I require either silence or very soothing music (but not too soothing!) to put me to sleep. Sleep doesn’t work well when you’ve got 3 rowdy guys down the hall screaming out profanities and all of them either skipping class the next day – or not having their first class until 2 hours later than I start mine. Either way, when this situation would occur, I’d throw on my sound blocking head phones and my MP3 player. (
That’s when I thought of the pillow – filled with speakers that played music. And I know, some of you might say, “But couldn’t you just play music on your stereo or your computer next to your bed? Yes. You could. But the music wouldn’t be RIGHT in your ear like a headphone would be – and blocking out most of the sound from further away from you. Which is why a pillow MP3 player was one of my first “great” ideas – In my opinion. I’d figure it’d have a built in alarm – something you could maybe turn off by punching the thing? Hah. Anyway, I believe the product has already been created – and obviously hasn’t been that successful – but then again it’s in one of those “we’re from the future stores”, so maybe it’s not mainstream enough yet.
Another product idea I had was waterproof running shoes – that breathe. I’ve heard that these have been created too – and someone made the argument that there’s thing called scotch guard too…OK – fine. The problem with really waterproofing something is that if it’s not letting anything in, none of your sweat or heat from your feet (if you’re being physically active) is escaping either. My thought was – if I could create some sort of reservoir for hot air/sweat that was built in to the sole – and if a person could wear socks that the sweat quickly passed through (like a second skin – Under Armor socks – do they make these?) the sweat/air could pool up in the reservoir, and for every foot strike, the shoe would create a suction, sucking all the hot air/sweat out of the reservoir and down a tube and out through the heel. Therefore leaving behind all the stuff that keeps your foot hot and sweaty.
And I understand that heat rises – so if there was a way we could make the top of the shoe like a better formed pot top – you know when you boil water and all the gas goes as far as it can – to the cover – where it becomes liquid again? And when you pull the cover off of a boiling pot of water, all the drops run to the sides? Something like that. I’ll be ticked if I see Nike come out with something like this (this is a recent idea – roughly about 4-5 months ago).
I have about 5-7 more product ideas – but they are much more short lived and sillier than these. Just a taste of the kinds of products I think about which would make life a little better.
Now for a couple business ideas. These are the ones that have loomed large in my head, and the ones that would probably require at least a few million in capital:
This one I came up with last year (probably about 8 months ago or so), and is more of an investment strategy than an actual business. With the recent fall of the sub-prime mortgage lenders, and those who got in to houses they couldn’t afford by using “creative financing” – the market for foreclosed homes is going to be where the real estate deals are over the next 2-3 years. Maybe even 5. Foreclosed homes usually are sold at a discount because the banks are just trying to offload the loan – and the risk as quickly as possible. For homeowners to default on their loan payments is obviously very bad for them – but also very bad for the banking institutions. From what I understand foreclosed homes are auctioned off at the county courthouses in the counties which the homes are located in. This is where I need the capital – on the day of auction, I would need roughly 20% of the foreclosed home price available to me – in cash.
If I was given even $1 million to work with in capital (again, I know I’m dreaming – but just play along) I’d try to find a couple homes either close to foreclosing – or already foreclosed in the $200K to $400K price range. I’d start with anywhere between 3 to 5 properties, and renovate them. It’s amazing what a lot of hard work by a couple people and no interest financing at the local home and garden store can do to a house that hasn’t been loved in 15 years.
So with the people facing foreclosure, I’d buy the loan from them, and make the payments for them. I’m assuming that with most of the foreclosed homes, I’d have to do some work to bring them up to my living standards (which are pretty high in my opinion) in order to get more value out of the homes when I sold them.
In essence, after renovating these newly purchased homes, I would rent them. But here’s what would make my offer so much more enticing to people looking to rent: I’d be willing to offer a cut (I was thinking 10% - maybe 20% if they’re great renters) of whatever profit was made on the home once I sold it. That way, even though they are renting from me – as soon as I sold it, I could guarantee an amount back to them meaning they would at least get some of their rent money back (or possibly break even or earn a profit). What’s great about this system I think, is that it forces the renters to take as good of care of the house as if they had actually owned it. The better they maintain the property, the higher it will sell for in the future – and the more they would earn. Definitely a “win-win” situation.
Just as an example, I’ll run through a quick purchase: I’ve found properties near my area, a foreclosed home in the area, 4 bed 2 and a half bath and 2000 square feet for $340K. Note – the median home price in my area is roughly around $450K+ right now. Looking at the pictures, it looked like a pretty beat down place. I’d (hopefully) purchase it at the county auction – putting $70K down. I’d finance the rest ($270K) on a 5/1 ARM, roughly making my payments about $1500/month for the mortgage. I’d do whatever it takes to upgrade it to my standards – new flooring, new cabinets, new appliances, granite countertops, paint, outdoor yard/lawn work – and hopefully get the job done after working roughly 2-3 months. I’d put up the “for rent” sign and only require the renters to pay market value or less. And would even be willing to take a couple hundred dollars worth of loss every month if that’s what it took to get people I trusted in that home.
After renovating the home, (putting anywhere between $20K-$70K in to the property if it really needed it) I would assume the value of the home would raise to at least $400K, or more. Assuming a more conservative rate of home price increases (at 9% a year – we were reappraised in our house after a year and appraised at 17% more than when we purchased) and taking a conservative home pricing of $400K, after 3 years of renting the home is then worth roughly $510K. Sell the home off (and assuming Michelle gets her Real Estate license, she sells this for very little commission, we’ll say 3% to pay the RE company), and pay off the balance of the ARM ($270K) and we should be in the clear.
So, quick number breakdown on ONE of the few properties we could do this with:
Costs:
Home purchase: $340K
Renovations: $50K
$200 loss on renters every month for 36 months: $7,200 (assuming we give them a discount on rent – and pay for our own insurance on the property)
Total Cost: $400K
Profit:
Home sale: $510K
After 3% RE commission: $495K
After 15% ($15K given back to renters – for keeping up the place (almost a 30% back of what they paid in rent!)
Total Profit: $80K.
Now I know that doesn’t look like much – but when you’re doing this with 3-5 different properties, it can add up pretty quickly. And really how much work did you put in this house for that $80K? 5 months at the most. I’d say that’s a pretty good income – even for 2 people.
Now if I could just find an investor to look at this idea with me…
My next idea (and last/shorter one since this post is getting out of hand), would be to start my own insurance company. I work for one – but sometimes I don’t understand it. It’s required by law to have insurance in our state – so no matter what the demand is there. Insurance to me is like gambling against yourself. That’s why it doesn’t make much sense to me – why should I gamble against myself?
In order to start my business I’d need base capital of about $5-7 million to be safe. This is to pay out on possible claims that could get pretty nasty. Obviously in the coverages I offered to my clients, it would have the maximum amount payable on a claim written on their policies, so no one claim would take even 20% of that nest egg.
Here’s how the insurance company would work: (Please note, I’m not sure if there are any sort of state/federal regulations against opening a business like this). I’d only go for the cream of the crop. And when I talk about those types, I mean literally the perfect drivers. The people who haven’t had a claim filed their entire lives. (Or at least the last 5 years). The guy who drives his 1998 Volvo 60 mph in the right lane, always signals, gets his oil changed religiously, checks tire pressure –etc. Never been in an accident, never received a speeding ticket…Immediately I think this cuts out 90% of the driver’s on the road today though. Sad.
Then we’re going to cut even further. We’re not going to allow drivers under the age of 25. We’re not going to write policies for people that live in high crime areas. We’re not going to allow a credit score below the 600s. What this means is that these people are going to pay us – on time. And will continue to pay us. So from the 10% left of those amazing drivers, we’ll have roughly only 7% left. That 7% of people is my target for this business. I want perfect people that don’t want to pay high premiums.
And I’m talking about SLASHING those premiums. Oh, you’re paying $600 every 6 months to Pemco? Come to our company, we’ll offer you $400. $300. Because really – isn’t that money all profit? Here you have a driver who is almost guaranteed to not get in to accident or get a speeding ticket for the next 20-25 years. Why do insurance companies even charge these people money? Because they’re helping to pay for all the claims the rest of us fuck ups create. They’re an elite driver or home owner – they deserve to be with an elite company that gives them a discount for being responsible drivers. Sick – I sound like Allstate.
But how will the claims work? You might ask. Because my client base is so small, the money flowing in can’t be as large as the other companies. You’re right. But the money being paid out on claims isn’t as frequent or as large either. Here’s why: I’m going to implement (as if the business is already existing) a 2 strikes you’re out rule. 1 claim – we’ll pay for it, and your premium will skyrocket by the way – hopefully you leave us at this point. 2 claims and you’re done. You are no longer our client. We thought you were better than that. I guess not. We’ll pay for it – as we’re throwing you out the door. Elite status card revoked.
I figure there are at least 10,000 drivers on the
So those are a few of my ideas. Have at them. Please don’t steal them. Hah – I can’t believe I wrote that. I’ve thought (daydreamt) long hard hours about them – and it even took me an hour to type this all up. Dang, I wish it hadn’t taken so long…
Goodnight.
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