If
success breeds success, then money breads
money,
and providing you can access the necessary
funds,
and are careful as to what opportunities
you
enter, you can enjoy good profit, using other
people's
money.
A
good method of collecting a large amount of
capital
and guaranteeing a large income is to
form
your own corporation. Cash generated from
the
sale of shares is much cheaper as there is no
interest
to pay on it, nor monthly repayments,
will
pay your salary and is not subject to
taxation.
It
does not matter what your company does or
trade
in, it will still be possible to issue
shares
at a nominal value, say, $1 each. You can
buy
a limited company off the shelf, ready made,
and
convert it into a public limited company. You
then
have the company charter written with an
authorization
of one million shares with no par
value.
The
shares are then divided into lots for
distribution.
Say, you keep 400,000 shares for
yourself,
allocate 300,000 for sale to the public
at $1
each. The remaining 300,000 you keep to
sell
at a later date when the value of the shares
has
risen, and becomes greater than the $1 per
share
that they have started out at.
Sign
up a stockbroker to sell your shares
(400,000),
usually at a commission of around 20%,
and
impress on the brokers that your new company
is
set for rapid growth.
With the capital raised from the initial sale of
the shares, invest in getting the company up and
running. Once trading profitably your own shares
will start to
appreciate; it is not unheard of
for shares in a new company to grow in value
three or four fold in the first few months of
trading.
The initial capital from the
sale of 300,000
shares less 20% brokers commission will give you
over a quarter of a million pounds with which to
employ marketing and management experts to run
your company, and advise on the best strategy for
future growth.
Your own shares (400,000) at a nominal value of
$3
are now worth $1,200,000, and the remaining
300,000 shares you have kept behind for future
sale can now be sold, again
at $3 each or near to
that value. Let's take a conservative value of $2
each: this will give you $600,000 extra in
operating capital.
Keeping your 400,000 shares as a nest-egg, you
award yourself a salary of $100,000 per annum as
the company's chairman. Being chairman does not
mean you have to take on the responsibility of a
managing director: instead, appoint an
business professional to fill this
post.
The most difficult phase in establishing your own
corporation will be in converting your limited
company, which you can buy off the shelf, into a
public limited
company. Here you will need expert
professional guidance. You might find a suitable
business professional to perform the work for an
agreed shareholding in your new company.
See
our other guides in this series, especially
"Become
a paper millionaire almost instantly".
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