Earl Chua

How the Economic Crisis Started

So I was talking to my financial advisor the other day and of course, one of the main topics that we talked about was the economic crisis that the United States is going through. Obviously we’ve all watched the news, read the newspaper, or at least heard people talking about the economic crisis and the $700 billion bailout plan. Although I didn’t pay as much attention as I could have, I felt quite foolish when I had to admit to my advisor that I really didn’t know why all of this was happening. It turns out a lot of people do not know as well. So I will try to explain it as best as I can.

This whole crisis started because of mortgages. A lot of qualified people were jumping on the hot real estate market and borrowing money from banks to get mortgages. These mortgages were very profitable and caught the attention of investment firms that realized that they could make money off of these loans as well. The investment firms and the banks ended up packaging a bunch of these loans and sold it off to larger financial institutions at a slightly higher interest rate, making a profit on the interest gap. These larger financial institutions would then repackage them into larger packages and sell them higher up and so on. This was very profitable for these financial institutions which also increased the demand for mortgages. The increased demand for mortgages then caused more and more banks to start lending money to less and less qualified people.

This was actually possible because although a lot of these people couldn’t afford to pay off their mortgages, home prices and the value of these buyers’ homes kept going up. The people who took out these mortgages began using their houses and borrowed against them. But nothing goes up forever and the party eventually came to an end. The housing prices stopped going up and these buyers still needed to pay off their mortgages. But because these loans were made to people who did not have the resources to pay them, they were unable to pay off their loan.

As people were not able to pay back their mortgages, these loans became the debt of the institutions that loaned the money out. Suddenly commercial banks that originated these loans and the investment banks that repackaged these loans were left to take on the debt of their faulty borrowers. As a result of all of this, a good amount of investment banks such as Merrill Lynch and commercial banks such as Washington Mutual could not pay back these loans.

The accumulated debt was so high that they needed $700 billion of hard earned tax payer money to make up for these millionaire bankers who messed up. Hope this helped.

Avoid the credit trap

Lately I’ve been hearing a lot more of people who are getting themselves into debt which actually inspired my “how to not be broke” series. Anyway, it’s very disturbing for me to find out that people I know and associate with have put themselves in the situation that they are in. While some have reasonable and manageable debts of $1-2k, I actually know of some one with over $100k in bad debt and not showing any signs of changing. Scary.

While there are good and more understandable debts such as student loans, business loans, or even home loans, I will be talking mainly about bad debt. Here are some things that can get you into debt quick.

Credit Cards

Everyone knows the benefits of having a credit card. Having a credit card provides a convenient way to pay for things and comes in handy during emergencies. Credit cards are convenient, but that does, of course, come at a price. What seems convenient at first can also get you into a situation that’s not only inconvenient, but emotionally disturbing as well – in debt.

Unfortunately we now live in a time where the consumer culture has a hold on us and easy access to credit is what causes overspending. Credit makes it way too easy for us to make large spontaneous purchases that we would not normally make if we had to pay with cash. These days, it seems like everyone is using their plastic to not just buy the things they need, but everything else on their wish list. Whether its an iPod, a plasma tv, or even vacations, people are purchasing things that they cannot afford.

The sad part about credit card debt is that for a lot of people, the more money you make the more in debt you become. The person who makes more money will just use his credit card to buy even more expensive and extravagant things that he cannot afford as well. It’s people in all classes living beyond their means which creates this vicious cycle of the debt trap.

Financing

I was talking to an associate who works at the BMW financial department the other day and he was telling me that less than half of the people who buy cars at BMW could actually afford it. And by affording it, I mean that the car is less than half of their yearly income. He laughed as he told me of young “ballers” making $30k a year and purchasing $50k cars and how they felt after getting the car. They feel that because they signed their life away to finance the car, people will think they are rich and important, and I guess that makes them feel better.

I would never be able to justify financing a car that costs more than my yearly income. That means that if I worked a whole year and didn’t have to pay for anything else…I still wouldn’t be able to pay off the car. What more if you have to pay for gas, insurance, rent, food, and I’m pretty sure credit card debt as well. At this rate, the debt will just continue to pile up and it will never end until he or she becomes bankrupt.

These days they make it way too easy for broke people to purchase cars. They will finance anyone and they even have deals which don’t even require any money down. As long as you have a job, you can walk into a dealership and drive the car away, with no money. This gets people to believe that they can afford things that they really can’t which in turn gets them into deeper debt.

Why do I think people get themselves into these situations? You’ll have to wait for the next post cause I need to go to sleep.

Spend less than you earn:

I know it sounds like common sense and something that everybody assumes they do, but how many of us actually do spend less than we earn? You know the saying, “The more you make the more you spend.” How is it that someone who makes $80k a year has less than someone who makes $40k? It is all defined by the person’s spending habits.

Living here in the Philippines the past month and a half, I’ve noticed that the people here like to spend money. Now Philippines is a generally poor country and the average person’s salary over here ranges from around $6-$12 a day. The thing is, the people here do not save at all and spend everything that they earn.

So when I first came here, which was right before the 1^st of the month (pay day), I thought there was some sort of holiday or something special going on. During the 1^st and 15^th of every month, all the restaurants, all the shopping centers, all of the bars are all packed. It’s like a big celebration over here and everyone is out and having a good time spending their hard earned cash. Everyone just got paid and they are all ready to spend. If you go to any Starbucks (which they have in literally every area over here) at any given time they are all packed. They are open 24hrs and I’ve even seen it packed as late as 2am. The Starbucks prices are generally the same over here as it is in the states as well. So basically because they earn less, in reality they are spending significantly more than if we were to go to Starbucks in the states.

The spending habits for some people in the states are not that much different either. It’s very easy to get caught up in the “rat race” and there are a lot of people who live pay check to pay check, some spend even more with their credit cards. Every month we accumulate bills such as our rent, phone bill, our internet bill, our cable bill, our car payment, our credit card bill, our car insurance bill, and the list goes on. Now I understand that a lot of these things are necessities for a lot of people as they are for me as well.

I’ve compiled a list of ways to help you not be broke by spending less than you earn.

1. Figure out how much you make: I know this sounds silly and I’m sure…or I’m hoping that the majority of the people reading this actually calculate how much they earn and take home every month. If you do not know how much you take home every month, how will you know if you are spending more than you earn?
2. Track how much you spend: I’m not talking about budgeting here. That’s later. Go one month and spend as you normally do but make sure to keep all your receipts and write down what you spend at end of each day. At the end of the month create an expense sheet to track how much you’ve spent and what you’ve spent your money on. You’ll be surprised.
3. Compare your expense sheet with your income: This step is important because it is required in order for you to create a reasonable budget. When you create your budget you should have in mind how much you would like to save or invest. That is the key point – save or invest. Your budget shouldn’t be to help you spend exactly how much you earn at the end of the month. Keep in mind that money saved is money earned.
4. Create a budget: Hopefully by creating that expense sheet you will become more aware of where your money is going and hopefully you spent less than what you earned. By studying the expense sheet, you will notice that the little things do add up. The Starbucks coffee everyday, the excessive shopping, eating at restaurants, having drinks at the bar, they all add up.

The next thing to do is to determine which expenses you could do without or minimize. Maybe you can start slowly and only buy coffee every other day or twice a week. Maybe you can try to limit your shopping habits. Maybe you don’t have to buy random girls drinks at the bar just because they ask. Get your priorities straight.

If you want to create an expense sheet or budget with excel, email me and I’ll send you the template that I use.

The other night I was getting a facial and naturally, during a facial you have a lot of time to think. I ended up being somewhat productive during that time because I did a lot of thinking and planning. I thought of some good website ideas, thought of some good websites to research, thought of some things that I needed to get done, and basically planned what I needed to do when I got home.

After the facial we grabbed dinner, walked around, went to the store, and then went home. I was happy to get home because I knew that I had a lot planned for the night but as soon as I sat in front of my computer…my mind went blank. I forgot what I had planned…or at least 80% of it.

Back in the States I always have my cell phone with me. I have a Treo 700p and I love it. I never leave home without it. Part of the reason is because I like to be able to keep in touch with everyone that I need to, but the other reason is that it keeps me organized. From the calendar, task list, Microsoft office, and even the calculator…I cannot function efficiently without it.

The one application that most people take for granted though is the memo pad. I love the memo pad. Anytime you have any kind of idea, whether you’re driving, working, watching a movie…it’s nice to be able to jot it down on your phone because you usually have it with you.

Unfortunately my phone service does not work in this country therefore I have not been carrying it with me. Instead I’ve been carrying a basic Samsung cell phone that is good for nothing but calling and maybe texting. It has a memo pad but I’m too spoiled and cannot stand typing on non pda phones.

It wasn’t until recently that I realized how important it is to write things down. Your best ideas come when you least expect it and if you don’t record it, you WILL forget it. You also remember things better when you write it down.

Whether its your cell phone, laptop, ipod, notebook, or even a piece of napkin; always keep something with you to write on.

When you think about something that you feel is a genius idea, write it down and look back at it in a couple days. It might end up not being that great of an idea anymore but at least you can re-evaluate it. On the other hand, if you feel that it is a genius idea then you will be glad you wrote it down.

I was so sick the past couple of days I thought I was going to die. That means I haven’t been having a good time and have been out of commission. This motivated me to post up on things that I miss back home.

People: Family, girlfriend, friends, co-workers, dog, and everyone else that I come into contact with every week.

San Francisco Weather: When indoors, we have the air conditioner on 24/7. Turn off the ac and 2 minutes later you WILL start sweating…instantly. It’s that bad over here. I even sweat with the ac on. It’s not just because it’s hot but it’s also very humid.

San Francisco Fresh Air: Now I realize that San Francisco does not necessarily have the freshest air in the world…not even in the state. But do not take for granted being able to go outside to get “fresh air.” The air quality in Philippines is terrible and it is impossible to get fresh air anywhere. I’d pay $5 to breath SF air for a good 10 minutes.

Milk: I love milk. I drink a minimum of two glasses a day. I actually can’t sleep without drinking a glass of milk first. Milk isn’t too popular around here. A lot of it is powdered and the ones that aren’t are nasty as well.

My Motorcycle: I miss riding my motorcycle. I miss the rush, the adrenaline, the feeling of the fresh air, and how fun it is to ride.

Work: Surprising as it sounds…I actually miss my work. Although I sometimes complain about how redundant it is and how much time I spend there, I actually miss it. I’ve spent my last 4 years being there almost every single day so I guess it’s kind of hard not being there.

My bed: I love my memory foam, queen sized bed. It’s so comfortable. I spend a lot of time on that bed and it has contributed a great deal as to why I sleep in so much. I miss it.

Lack of Mosquitos: I am not even exaggerating. I have AT LEAST 80-90 mosquito bites. I know that after a week or two it should cool down…but I’m pretty itchy right now.

Now don’t get me wrong. Philippines really is not THAT bad. Well, the weather is but as soon as you get adjusted to the weather and your body gets adjusted to being in a new country, it’s actually pretty nice.

If you have money here, you live almost like a celebrity. You have people everywhere servicing you. The shopping areas rival Beverley Hills…maybe even nicer. There are ponds, waterfalls, and gardens. They have Louis Vuitton, Marc Jacobs, and even Ed Hardy stores over here. They have very modern and classy restaurants with outdoor seating and live bands. Although this is generally a poor country, in the area that I live in, people have money. Everyone is well dressed, even nicer than people in San Francisco.

I am eating like a king over here. The seafood is like none I’ve ever had in San Francisco. We went to a shabu shabu spot where they had these huge tiger prawns on skewer sticks that were still alive! You can watch the prawn’s legs squirm and move as you dip it into the broth. 2 seconds later you eat it.

Everything is dirt cheap. Laundry is cheap…they even iron and fold your clothes for you. I handout 20 pesos tips (45 cents) and I’m making people’s day. You tip anyone in the states a buck and they get disrespected. Massages are around $7 and they are off the hook. Facials, spa treatment, and everything else; its all here, its all walking distance, and its all cheap!

Now I don’t want to give any misconception. Philippines is a really poor country. I just live in the nicest part of Philippines. This is as nice as it gets. When I travel outside my area you see a lot of poverty everywhere. You see kids running around the street in the rain begging for money. You see families digging through trash to find food. You see stray dogs and cats roaming the streets looking for food to eat. You see how hard a lot of these people work. It is a really humbling experience.

I’ve been to lazy to take pics but I will soon…

The flight wasn’t too bad. It was about a 14 hour flight and I slept through half of it. I usually have a hard time sleeping on airplanes but I now have a new strategy. I’ll share my secret:

1. Do sudoku puzzles for the first hour
2. Ask the stewardess for 2 glasses of red wine
3. Down the red wine (both glasses)
4. Do one more sudoku puzzle and do not stop until you finish it…no matter what
5. Listen to ipod
6. Close your eyes

I was so knocked out that I missed my first meal.

I was a little disappointed because I wanted to be productive during my flight. I planned to read one of my books, study up on some material, or maybe even make a blog post. What I ended up doing was sleep, listen to music, and sudoku.

I guess the reason why I was not productive was because I did not have a set goal for what I wanted to accomplish during my flight. With everything that you get into you need to know your outcome. The clearer you are in what you want to accomplish, the more you empower your brain to focus on the goal. If I knew that I wanted to read during the flight and made it my goal to do so, I will most certainly have read my book.

Anyway…I enjoyed my first day of Philippines. I actually did a lot considering I’ve only been here a little over 12 hours. I met up with family, went to my grandfather’s 1 year death anniversary ceremony, ate 3 times, sight saw a little bit, and looked at some condos. I’m still a little jet lagged and tired from my long day but I will keep you guys updated and I’ll also try to take some pics.

Goals for tomorrow:

1. Study for most of the day
2. Buy weights and yoga mat
3. Look at more condos
4. Play basketball
5. Get a post basketball full-body massage for 7 bucks

I’ve come up with a list of traits and qualities that I feel are essential to build upon in order to ensure that you reach your maximum potential in business. I obviously do not have all of these qualities, but am using this as a goal to help myself improve.

1. Become Opportunity Aware:

Ever think to yourself, “There’s got to be a better way!” Or, “If only there were some kind of business that would help me with my problem, I would for sure use their service!” There are hundreds of thousands of opportunities out there waiting for you, the only problem is figuring out what works best for you and which one do you see yourself enjoying.

2. Take Risks:

No business is risk free and the sooner you realize that, the sooner you will be able to take the next step. The easier it is for you to assess risk, the more potential you will have for success. You’ll be able to make intelligent and bolder decisions without fear getting in the way.

3. Do Your Research:

Research the market; start up costs, potential customers, trends, etc. If you get into any kind of business without doing extensive research first, maybe you are a little too much of a risk taker. Know what you’re getting yourself into first.

4. Become Self-Motivated:

When you start your business, you have no one pushing you, no one telling you what to do, and it’s hard to stay on track. It’s essential that you keep yourself focused and motivated. If you are someone that loses motivation easily, gets easily discouraged, and constantly needs somebody to tell you what to do and keep you in track… maybe you need a boss.

5. Be Determined:

You’re going to encounter a lot of doubters and haters when you first start out. If you truly believe in your idea then go for it. If every person listened to every hater then what would this world be? You also have to understand that starting a business has its ups and downs. You have to be prepared to not make any money for the first couple of months. That’s why it is really important to have a strong will and to be determined.

6. You Must Avoid Procrastination:

If you’re a seasoned procrastinator like myself, then you’re going to have a hard time staying on track and staying motivated. The sooner you complete your task the more productive you will become, which in turn will make you more motivated. Don’t start something else or something new until you complete all you can with the current task.

7. Be Creative:

In business, being creative and standing out gives you the edge needed to set yourself apart from your competition. When you have a handful of businesses offering the exact same service, the one who stands out the most will be the one with the most customers.

8. Learn to Easily Adapt to Change:

The business world, as well as everything else in life, is in constant fluctuation. You should learn to be able to adapt to change quickly, without modifying your main goal or mission. You might be forced to change the way you do things to adapt to changes in the market, but adapting to change is a positive for you and your business. You should read the book, Who Moved My Cheese?

9. Continue to Learn:

Learning is an ongoing process that we go through our entire life. In business, you will learn things not only about the business, but about yourself as well. Just be sure to apply what you learn.

10. Focus on the Business:

Focus on how you can make your business better. How can you improve your service? How can you make the customer happier? Asking yourself questions like this helps you put yourself in your customer’s shoes and helps with creativity.

11. Learn to Welcome Responsibility:

Learn to understand that you are responsible for everything and anything about the business. When you welcome your responsibilities, you gain confidence in yourself and you become a stronger person.

12. Learn How to Market:

You can have the most awesome product, or have the best service ever…without marketing, you won’t have any customers. Marketing is the lifeline of a business and as a business owner, it is key that you develop skills in marketing.

13. Keep Good Books:

Bookkeeping is crucial! Numbers and business go hand in hand. If you don’t know what kind of numbers you’re bringing in, you don’t know what’s going on. You don’t know how much money you’re spending, how much you’re making, and how much money you’re losing by not keeping good books.

Bookkeeping is also crucial because it helps you keep track of your progress. How can you improve if you don’t know how you’re doing to begin with?

When you own and operate your own business, every idea, every move, ever decision is all up to you. You are in charge, you are in control, and you are the one to blame for its success or failure.

Running your own operation can be very stressful and it is very easy to get into a situation where you lose control of your business and the business ends up controlling you.

When we initially started running our first shop, business of course started off slow. With just my brother and I running the shop, we felt that we could handle more business; so we took control and took the necessary steps to bring in more customers. We created a marketing plan, we handed out fliers, and basically hustled to bring in more business.

Our hard work paid off and we soon became pretty busy. We became so busy that it was almost too much for just my brother and I to handle. We contemplated hiring another technician to help lessen the work load, but decided that we would tough it out and just work harder. Big mistake.

Business became way too busy for just the two of us to handle and the shop was not running as efficient as it could have been. The cars took a little bit longer to inspect, the customers had to wait longer, and we also lost a few customers who did not have time to wait. It got to the point where we became flustered every time more customers would come in.

We were so busy with working, taking on as much as we could handle, that after a while, we became burnt out. We lost motivation to bring in more customers and it got to the point where everyday we just waited for events to happen and then responded. We had turned into an employee of the business, and the events around us had become our boss. We lost control. We had to do something.

After much delay, we finally decided to hire another technician. We could not believe the difference that one person could make. The shop became more efficient, the cars were inspected quicker, and customers were happy. It became so efficient that it felt as if business had slowed down. In reality, we were inspecting more cars and working less. We took back control of the business, regained our motivation, and began marketing so that we could bring even more customers in.

Lesson learned:

When running a business, hire employees to do the work for you. As an owner, your job isn’t to work, but to make decisions and to run the business so that it can make the most money possible. When you become an employee of the business, you lose control and the events around you become your boss.

First of all, starting this blog is a little unusual for me. I’m not the best writer, this is my first website, and to be frank…I’m not the most open person.

I plan to change all of that.

For those who don’t know, I will be going to Philippines soon to help start our web business. I will be there for 6 ½ weeks and by doing so, will be leaving behind my family, my friends, my girlfriend, my dog, my business, and everything else around me in my comfort zone.

This trip will be a retreat for me where I will be away from everything I am comfortable with. It will be a time to get away from my day to day life, all the responsibilities and all of the distractions.

It’s not easy taking this step and living in another country…at least for me it isn’t. I’m the type of person that needs that kind of stability. But I plan on being as productive as possible and will be using this experience as an opportunity to grow. Seeing as I will have nothing better to do there, I plan to do a lot of work, a lot of studying, and a lot of exercising. This is no vacation. It will be all work and no play.

This blog will be an outlet to help me organize my thoughts and my ideas, to track my progress, and to record what I learn on the way. I also plan to use this to motivate not just myself, but hopefully my readers as well. It will also let whomever is interested know what I am up to.

If you have any questions, suggestions, or just want to say hi…leave a comment! Comments will motivate me to post more.

In high school I drove a Mercedes, wore expensive clothes, bought pretty much whatever I wanted, and ate out almost everyday. I was what some people might consider as “ballin.” Or, that’s what I thought I was at the time. My parents did not support me financially; I made my own money, spent it freely, and felt like I was on the right track to being independent and successful. When I look back at it now, I laugh at how naïve I was.

In reality, I financed my Mercedes, was slaving myself in making payments and didn’t save a dime that I made. Because I never received any allowance growing up, I started working at the early age of 11 picking up trash and doing community service for $3.75 an hour. I worked while all the other kids played, just because I loved the way having money felt.

During high school I worked full-time as a bag boy at a grocery store making $7.50 an hour. I worked late nights which affected my education but I didn’t care. I wanted to make as much money as I could. I looked up to the Checkers that worked in the store. I wanted to be like them. Some of them drove nice cars, Lexus and BMW’s. In my eyes, they had made it and were successful. I knew that if I worked hard enough…one day, maybe in a couple years I would get promoted and get to their level – making $19 an hour.

I was actually pretty good at the job. Bagging was easy to me and became routine. I even memorized what aisle everything was in and I prided myself in how good I was. I got along well and was liked by everyone in the store…including the management. I became comfortable. Keyword: Comfortable.

I worked at the store for 2 and a half years and it wasn’t until I was close to being promoted to a Checker that I really started thinking about what I really wanted to do with my life.

I could always go to college…that’s what everyone else was doing. But what would I do with that? Me going to college felt like I would just be going just to go. I never bought into the hype of college degrees unless you knew exactly what you wanted to do with it. I didn’t.

I thought about most of the people that worked at the grocery store. Those people had been working there 5, 8, some even 15 years and more! Did I really want to become a Checker for the rest of my life?

So I made a bold move. I quit. I had no reasoning to give them and I had no plan on what to do next.

After I quit, I felt like I had to do something. I took some random college courses that led nowhere. I worked at a private school as an after school teacher (which I loved by the way) but the hours were sketchy and it didn’t pay much. For the first time in awhile…I was broke. I did odd things here and there to make a few bucks. I would scour Craigslist buying and selling cars, making a few hundred here and there but it wasn’t consistent enough. My mom would always yell at me and tell me how stupid I was for quitting my job. Telling me about how much money I would be making and basically tried to make me feel like I made the wrong decision. I thought about it a few times, but in the end never regretted it.

After almost a year of being broke with no direction, I decided that I had to take action. I had been working my whole life and decided screw what everyone else thought; I want to be my own boss. That was my only option to being successful, not by working for someone else. I was not hard working enough, did not have enough credentials, and I probably wasn’t smart enough either. The only way for someone like me to come up was to do what everyone else thought was impossible. Negative thinking mixed with ambition worked out for the better I guess.

After giving much thought, I came to the conclusion that I wanted to open up a used car dealership. Cars were always something that I was interested in, and I felt that it was something somebody like me could succeed in. I began telling people about my plan to open up my own business. They all laughed at me and no one took me seriously. They didn’t think it was possible for a kid with no money to accomplish.

So I had my goal set but understood that obviously before I could open up my own business, I’d first need finances and experience in the field. I decided that I would try out the auto repair industry. I applied at different auto repair shops but nobody would hire some random kid with no experience.

I figured I’d take some automotive classes at my local community college but realized that completing the whole program would take 4 years! I for sure did not have that type of time to waste. I decided to attend Sequoia Institute in Fremont, CA, an hour south of San Francisco. The cost of tuition was $23,000 but the program only took 14 months (the school sucks btw). I figured if I went there, I’d pay a lot more but I’d get out earlier and make the money back quicker. I figured I’d be better off in 2 years working with a little bit of debt as opposed to still being in school and broke.

I definitely took a gamble going there. Commuting was expensive! Thank God for Craigslist because before it got as played out as it is today, I used to find some pretty slick deals there! I would buy and sell items ranging from speakers to furniture to cars…making whatever I could just to pay for gas and a little bit to eat.

Going to automotive school I realized that I did not want to become an auto mechanic. I hated getting my hands dirty, and frankly, am not that hard of a worker. I just felt that this was what I needed to do to achieve my ultimate goal: to be my own boss and to open up my own used car dealership.

After graduating I ended up getting my smog license and started working at a smog shop. At a smog shop, you don’t do any repairs; all you do is inspect cars. You barely get your hands dirty and it’s a lot more laid back as opposed to a repair shop. It wasn’t until I started working at a smog shop that I realized just how lucrative of a business it was. The shop I worked at was getting about 40 cars a day at $50-$80 a pop in profit. Not bad. I worked hard but also felt like I was compensated well. I made about a grand a week and was feeling pretty good about myself.

I liked my job, but the one bad part of it was my boss. My boss treated his workers like crap. We would work hard non stop with no breaks, even working through our lunch breaks without getting paid for it. He’d yell and order us around, and never said thank you. He’d brag and show off his brand new BMW M3 convertible and laugh at my car for being so old. So after a month, I made another bold move; I quit. Only this time, I had a plan. I now had a new goal: open up a smog shop.

Right about the same time as when I quit my job at the smog shop, my brother Errol had dinner with an old friend from high school. During the dinner, Errol finds out from his friend that her dad actually owned a smog shop that was struggling, and that they were possibly open to selling it. Call it luck or call it God’s will, we were presented with a tremendous opportunity that could not have come at a better time!

So they were selling the business for $120k. That’s a lot of money. We did not have that kind of money. We barely had a tenth of that. I only worked at the smog shop for a month and Errol just graduated and was working at The Good Guys. So out of faith, I sold the Benz and we attempted to borrow money from everyone and anyone we could – besides our family. Why? …Because we wanted to do it all by ourselves. We knew we were taking a huge risk, but we were confident that we would succeed.

After much begging and much stress, we finally got enough to finance the business with the owners. We took over the shop and worked our butts off. We were both putting in 60 hours a week. Running the whole operation with just two people was not easy. After hard work and a little bit of innovation, we took the shop from averaging 8 cars a day to 30. We ended up paying off the business in 6 months. About another year later we bring up our average to the 40’s and sometimes 50’s.

With business doing well, I was finally capable of opening up my used car dealership. I got my business license, business name, dealer’s license, rented a parking lot, and even had a few cars ready to be sold. Shiny Motors was the name of my dealership. I was excited that I finally had my dealership ready, but there was only one problem. It’s a lot harder to make money with a dealership than the smog shop. There’s a lot more competition and it was a lot of work buying the cars, as well as selling and negotiating with customers. There’s also a lot of liability and stress involved. I decided that it wasn’t worth the trouble and that I should just stick to smoggin.

Business was so good that we decided to open up another smog shop. We had the money to invest, thought that if we could get this shop running the way it did, why wouldn’t we be able to do the same with this one. We were young, naïve, and maybe even a little cocky. It did ok. Started off slow but after a while made a little bit. Nothing close to the first one though.

About another year after opening the new shop, we decided to take over a struggling auto repair shop. With the same mentality as the second shop, we were over confident and felt that we could get any business and turn it around. That shop struggled early on and was losing money. Eventually it started making money, but was not worth the headache. Overall, we were working harder, had more stress, and was not necessarily making more money.

We realized that the main reason why our first shop was successful was because it was our first shop. We were young, we were broke, and we were hungry. We gave everything we could to the shop; all of our attention, all of our time. We focused on nothing but how to make our only business better. By having two and eventually three shops to run, we were overwhelmed. Two people running three shops is definitely not efficient and the results showed on our business reports. Our first shop was also slightly affected due to the lack of attention.

After much thought and debate, my brother and I decided that we needed to sell one of our shops. Although we were making slightly more money with 3 shops, it was not worth the stress, liability, and most important…headache. We sold our second shop and things went on running smoothly.

My brother and I had become pretty good managers. Business was good, things were looking great, and then we got comfortable. Keyword: Comfortable. We were able to set up our shops to the point where it required minimal attention on our part. We both slept in everyday, came to work at noon, and pretty much hung out at work. Things were going a little too well for ourselves that we became a little too comfortable.

One good thing that my brother and I did that I highly recommend was have weekly business meetings. I think that these meetings were a key part of our growth. Having a meeting set with the sole purpose of discussing business can be very productive. It gets you in the right mind set to become creative and also to keep you accountable. We noticed that when we stopped having our meetings was when we began to slack.

It was through one of our business meetings that we realized how comfortable we had become, and that in order for us to grow, we needed to make moves. We knew that our businesses were limited in potential and that if we wanted to become multimillionaires, we’d have to take some gambles and try new things. We could easily run our two shops efficiently and make what some people would consider a very comfortable living. We felt that we had more potential than that.

Through our business meeting we actually came up with a lot of good ideas. We thought of ideas that ranged from websites, to online prepaid services, to a motorcycle clothing line, all the way to hair products.

Our first plan of action, which brings us to a few months ago, was to get into manufacturing in China. We planned to go to China with 10 good products to manufacture and hopefully, one or two of them would make it big. I partnered up with both my brothers Errol and Erik to form our team. We had everything planned out. We had our budget sheets, our product ideas ready; we even sold the repair shop so we would have less to worry about while being in China.

One thing we didn’t realize was how bad the timing was. It is pretty hard to get a visa to enter China right now. Not only are the Olympics being held there, but there were also other things going on with the earthquake to the drama with Tibet. We decided that we needed to put that idea on hold.

I think that maybe us not being able to go to China was a blessing in disguise. Knowing that we had to hold off on China for a while, we realized that maybe it would be more beneficial to start a marketing team before manufacturing the product. Manufacturing is easy; selling your product is the hard part.

My brother, Erik is experienced and is very successful in web marketing. Through him we realized that there is a lot of money to be made online with web marketing. Without being too specific with our operation, we basically started a web marketing call center in the Philippines.

Erik and Errol are currently there and are setting everything up. I will be heading over there in 11 days. .