Money Report #1 by Jay Abraham Copyright 1996 by Venture Marketing Society, L.C. All rights reserved. Reproduction or copying ofthis report isnot permitted without written consent of the publisher. “This seport is intended to ovine « business concept tha the Society beicwes is potentially profitable nd worth uthe investigation, butts profitability camel be guaranteed, Readers ace hereby cautioned that any business, expecially «small or new business, involves significant ask of failure. This snot ebusisess plan. Its he opinion ofthe publisher that the infrmation contained herein sno sufiient to tat a business and twill be necessary for the reader to do further research onthe apportanity desrited. Venture Marketing Society, LC. i an information provider only. It doesnot provide any timing, back-up or personl consultation in the implementation or execution ofthis or any other den. ‘The information provided i this tepor is believed to be accurate but its accuracy cannot be ‘guaranteed, In some instances the Socioty may have relied on information provided to it by third partes and the Society may not have tested the concept in practice. Finally, while dhe report may speak of investing capital, the concepts described are not passive investments. They require active management. ime of Concept Retail customer building of Cons Renting, leasing, selling, joint venturing helium dirigibles (blimps). Overview of Concept ‘One of my past seminar attendees is in the business of manufacturing helium blimps. He sells predominantly to automobile dealers around the country. He also sells them to retailers, particularly furniture dealers or high-ticket type retail facilites. ‘They run them with signage on the blimp and also in most cases with sub-signape hanging about 20 feet below it. These signs will normally refer to a very specific activity: 4-day sale, weekend sale, 20% off, buy a car get stereo free, all convertibles at invoice plus $10, something like that. He reports that when a car dealer uses this customer-building technique properly, volume/sales/number of customers (no pun intended) “balloons” as much as 40%, He says it is not at all uncommon to see 20% or 30%, but 40% is not far-fetched. To appreciate the significance of this statement (if experience bears it out), you have to understand that a 40% increase in an automobile dealer’s volume in a month oF two can be massiveIt is not uncommon for a dealership to do $10-20 million a year. Not all of them do, but many do significantly higher. The helium blimps normally sell for $3-5,000. My past seminar attendee’s name is Scott Zimmer of Giant Advertising. They are located in the Orange County area of Southern California. Their direct phone number is 1-800-648- 7907. There are several other competitors. One of them is called “Bigger Than Life ‘Their phone number is 619-449-9988. I know Scott, I feel comfortable recommending, Giant. I don’t know “Bigger Than Life” although it may be fine company, The problem Seott, my past seminar attendee, has is just selling dealers on buying the blimps because they don’t always believe that a 40% increase is possible. Based on Giant’s experience, high-yielding improvements in sales and profits are commonplace. It is rare that a retail facility using this device fails to produce higher traffic and corresponding sales. The reason is obvious if you think about it. You can see the incentive to come to the facility from as far as away as three or four miles. At night, the balloons can be lit. During the day, drivers oa the highways and major streets can see them from miles away. Depending on retail operating laws in the county, city, or township, retailers sometimes have to get a permit. Sometimes the blimps are only allowed on weekends, sometimes they are not allowed at all, You have to check state and local law Nevertheless, the Venture Marketing Society feels there is a promising opportunity for entrepreneurial investors who want to go to retailers, like car dealerships and furniture dealers, and offer to provide the helium blimps with appropriate signage free upfront — in exchange for one of the following: (a) so much per customer resulting during that selling period, ie., $5 a customer or $10 a customer or $50 a customer or $100 a customer for every customer buying during that period; (b) a percentage of the actual sales generated during that period; (c) a percentage of the sales above normal generated during that period; () an equivalent of a percentage but received in the form of credit for goods. The barter option is especially interesting. For example, let’s you wanted 5% of all sales oF 5% of sales above the baseline volume the retailer expected to do on its own without the use of the blimp, Let’s say that 5% resulted in $40,000 worth of profit sharing, or commission or “production rent” the car dealer or furniture dealer owed you, but you agreed to take it in the form of credit for cars or furniture or the like. You can use said credit for yourself, or you can sell it to somebody at a discount over what they ‘would have to pay for it. By that I mean if a car sells for $20,000 and the dealer pays you with two cars instead of cash, the dealer actually saves between 12% and 18%, since that’s their mark-up from wholesale. If you know that you can sell that car to a third party for 20% or 25% below market; it should be very easy to sell it Where is the profit opportunity in this concept? Very simple, You can purchase a blimp for approximately $4,000. I believe you can negotiate volume discounts with someone like Giant Advertising or their competitors.Ifyou are an astute negotiator, you will work out a trial arrangement where you will buy ‘one or two to test and if that works, you then will have the option of buying blimps in volume at a lower rate. You go to the car or funiture dealer or other kind of retailer, you negotiate one week, two weeks, four weeks or multi-month deals. You get a written agreement. would suggest that you find a skilled and capable attomey who is good at simple, non- threatening but very binding letter agreements that just state the proposition. And I strongly suggest you only del with reputable organizations. If you don’t know if a dealer is reputable, check with the Better Business Bureau and the Chamber of Commerce and their trade associations. There is always some kind of trade or industry association at the local or state levels. If the dealer doesn’t want to share with you on variable or performance-based compensation — meaning they don’t want to share a percentage of the gross or so much per customer — that’s no problem. You can rent the blimp or balloon to them by the day for the month or the week. If you pay $3,000-$4,000 for it and you want to amortize that investment in a year or six months or less, all you have to do is rent it to the dealer for $_aweek or a month. I don’t know this -- you'll have to test it — but I believe a dealer would think nothing of paying $300 to $500 to rent a blimp for a weekend or a week. You can easily have a performance guarantee that if the blimp doesn’t generate increased sales and traffic by the end of the first day, you'll come and let the helium out, take it down and refund their money, I would get a deposit or at least a guarantee ftom them of a deposit, but if you rented it for $300-500 per weekend or even per month, you will amortize your ‘expenses over probably three to six months. This will vary and differ from application to application, but itis very, very promising By the way, Tam told the hot air balloons last approximately three years and that if they get damaged, they can be repaired and mended by the manufacturers for a relatively modest fee ranging from $100 to $500. When they are flying, itis very hard for anyone to know that they have holes, nicks or patches on them. Establish the blimp's product life and the cost of repair at the time you make your initial deal with the manufacturer. Maybe there’s some kind of warranty. I don’t know. Key Variations 1, You could obtain vacant space, then make a deal with a retailer or a wholesaler who has a lot of merchandise of one or more categories that if they will put the merchandise in, you will put the blimp in for a weekend sale and make a percentage deal with the landlord. A you have to do is orchestrate this.2. You can go to smaller-ticket retailers, ice cream stores and the like, and make deals with them to use the blimp during the offtimes, when your prime client normally experiences low traffic. In other words, maybe you get $500 a weekend from a car dealer, but you get $150 for the week from an ice cream store. The small store might {g0 for a four-day week, Monday through Thursday, while Friday, Saturday and Sunday may tum out to be the best retail days for car dealers and furniture dealers. I don't know. T’m just throwing out this idea for you to experiment with. You can do it with supermarkets Again, don’t be worried about how you get your compensation. Just be worried that you do, If you can’t get a percentage deal and end up having to rent it or lease it, who really cares as long as you make a fair and handsome return? If you can get only $500 a month and the blimp rents every month to different people, you would be bringing in $6,000 a year for an investment of about $3,000. 3. You could make a deal with a dealer’s association. In other words, there are lots of car dealers in major cities or counties that really don’t compete with one another because they are at different ends of the city or the county and their markets don’t overlap that much. Although some customers go all over, the vast majority of people buy within two or three miles of their residence or office. ‘You can make a deal in which you sell or lease the blimp to the whole group and rotate it for them, with you doing all the work and making all the signs 4, You could have a rent-to-own program where you charge double or triple what you paid for the blimp and the dealer gets the first month as a rental to find out if it ‘works, but they pay a premium. Let’s say you want to sell blimps for $6,000 and you're the only person who will let a dealer rent it for a weekend or a month at $500 while giving them an option to apply that $500 toward the full purchase price. ‘Look what you just did. If you've tested the idea you have a high level of confidence that it’s going to work and this and that the rent-to-own offer will result in a sale. You know that it either works or doesnt, by and large, and I tend to think the people who came to my seminar were telling the truth. It probably does pull well in most applications. Positioning this as a “semi-passive” investment You can have somebody represent you as a salesperson, You don’t have to do all the work yourself. I wouldn’t recommend that. The concept the Venture Marketing, Society is advocating is what I call the Tom Sawyer philosophy where you basically have ‘other people do all the work for you and you reap the lion's share of the profits or the opportunity. (If'you remember the book, Tom Sawyer got his buddies to paint a fence for him for nothing by convincing them it was so much fun he didn’t want to give them his brush)There is nothing wrong with hiring a commissioned salesperson, having him or her sell the concept of rent-to-own, at $500 per weekend, week-long, or, if you want, month- Tong rental, making that rental apply 100% to a purchase price of $6,000 or 80, which is double what you paid, basing the deal on the fact that the retailers have ten days from the time they rent to decide whether they want to purchase, If every other retailer buys a blimp (ie. you sell one every two months) you could approximately double your money every 60 days, which annualized could be 1200% if it works. Ifit doesn’t work and you've only rented it for a month for $500, you have gotten back 1/6th of the full price in the first transaction, Obviously you have to pay a ‘commission to the selling agent. 1 would give him or her 20% of the rental price and 10 or 15% of the selling price. I would sign them to a non-compete agreement, so that if you teach them how to sell the blimps they don’t go around you. I would get an exclusive from the blimp company for your geographical area. You can test it in different industry applications like furniture stores, car dealers, etc. You make an exclusive deal after you prove where it works the best and on what formula it works the best, and then you go to organizations, associations and industry newsletters and have them offer the concept to all their members, giving them a small percentage of the profits with you keeping the lion’s share. It could turn into a massive business. Head/Trial Strategy First of all, before I would encourage you to spend any amount of money, I would ‘want you to test or prove the concept for yourself. First and foremost, you should call Giant and all their competitors and ask them to give you the names of three or four or five diversified businesses who have bought their products. That would be a good list of references you could call and ask questions. When you ask the questions, find out exactly how those suecessful retail users have applied and developed their own strategies to maximize the effectiveness and pulling power of the blimp. T would then ask the manufacturers, Giant or the competitors, if they have any used or returned blimps they would be willing to sell you at a discount, at least one or two for you to test with the understanding that if it works, you are contemplating buying a substantial quantity. T don’t care if you tell them “substantial” means five or 25 or none. 1 just think this would be a good strategy to get them motivated to help you. You should know that in this business they get certain used blimps that are traded in or traded back, They get blimps that dealers use a brief period of time and return. They also create custom blimps that they get stuck with because the customer never pays for them, The odds are they can retrofit these very easily. In other words, a blimp that was made up for Acme Ford could be changed easily to be generic and say, “Deals on Wheels”or “Automobile Sale of the Decade” or “Prices Slashed on Cars This Week Only” or something like that that you could test. Try making a deal where instead of paying $3,000 or $4,000 for a new blimp, you pay $500 or $700 for a used one that has been retrofitted, that isn’t perfect but is still ‘good enough to prove to yourself whether the concept works. When you get it, try it out ina number of different applications, If you can’t initially rent it or lease it because it may not be in perfect condition, joint venture it or trade for it. Just use it to prove to yourself that it works. [fit doesn’t work, you can probably sel it for some amount of money to some retailer in your area and recoup most, all or more than your investment. Keep in ‘mind that the market value of blimps is anywhere from $3,000 to $5,000. Most blimp companies don’t try to sell to every retailer so it should be feasible for you to get rid of it if you don’t make the concept work. If it works, test different permutations because your goal is always going to be to get the highest and best use, retum and yield on your time, opportunity and your capital ‘That means you want to make sure you try out all kinds of retailers, all kinds of permutations, all kinds of different signage, and all kinds of different financial transactions to sce which is easiest to sell and to get paid on. It might be twice as hard to sella lease deal, but a lease may end up making you ten times more money long-term than a rent-to- purchase, It might be that being paid $20 a customer is ten times easier to persuade the dealer to try ~ and ten times easier for to collect on — than 10% of the increased profit, ‘You are going to have to develop what works for you. My quick take is that this concept should not be hard for you or your employee to sell. It is very easy to put an ad in the paper and say, “Breakthrough business-building concept, All retailers. Good prospects. No risks on their part, Great career opportunity. Generous commission. High income potential. Fun.” When somebody calls on you, make him or her a proposition that they try it out for a week because it should be easy.