Latest / The Property Entrepreneurs Podcast with Alasdair Cunningham / Before You Start: Build a Buffer and Clean Up Your Credit

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Before You Start: Build a Buffer and Clean Up Your Credit · The Property Entrepreneurs Podcast with Alasdair Cunningham

• 0:35
  SPEAKER_00: Good morning.
• 0:36
  SPEAKER_00: This is Alistair Cunningham.
• 0:37
  SPEAKER_00: This is the Property Entrepreneurs Podcast and it is 7am.
• 0:41
  SPEAKER_00: So in today's episode, I want to talk about something that is really important, and it's something that I see quite regular from people who are looking to either start a business or they're looking to get some sort of development or some sort of growth, right?
• 0:57
  SPEAKER_00: And it's about the preparation to grow.
• 1:00
  SPEAKER_00: So there's a saying in the military I want you to all remember when you fail to prepare, you prepare to fail, okay?
• 1:07
  SPEAKER_00: And it's really quite simple, okay?
• 1:10
  SPEAKER_00: You're trying to embark on a journey that will change your life, change your family's life, and you know, could have massive benefits, okay?
• 1:21
  SPEAKER_00: Now these benefits can be financial, can be time freedom, can be, you name it.
• 1:25
  SPEAKER_00: Like there's hundreds of benefits that come from winning in life, okay?
• 1:28
  SPEAKER_00: But all too often people start something and they're not in the best position to do so.
• 1:34
  SPEAKER_00: They've not prepared for it, they've not got themselves in the right, the right headspace to do it, they've not got themselves in the right mind space to do it, they've not got themselves in the right financial space to do it.
• 1:45
  SPEAKER_00: And they're doing it from a position of panic and a position of let's just throw it all together.
• 1:50
  SPEAKER_00: And whilst I I get that, and whilst I am very much on board with the hey, just figure out the A, B, and C and then let the X, Y, and Z figure it out, I am I'm good with that, right?
• 2:03
  SPEAKER_00: But you can do something to just put yourself in the best possible position.
• 2:07
  SPEAKER_00: Now I'm gonna talk about a number of things today, right?
• 2:09
  SPEAKER_00: The first things first is if you're gonna start a new business venture, right?
• 2:14
  SPEAKER_00: Don't matter what business, don't matter it's property, it doesn't matter if it's e-commerce, doesn't matter, I want you to understand, right, that for the first three to six months are gonna be pretty goddamn tough.
• 2:25
  SPEAKER_00: Okay, minimum.
• 2:26
  SPEAKER_00: Three to six months are gonna be tough, right?
• 2:28
  SPEAKER_00: So get yourself in a situation where you're not desperate to earn money in the next three to six months.
• 2:34
  SPEAKER_00: And if that means you've got to delay starting your business until you've got that little bit of a buffer in the background, or you've got some sort of safety net, then do that, right?
• 2:45
  SPEAKER_00: There's there's it it is much better, and I would advise all my clients look, if you've got no money, or you're living week to week or month to month, and you can barely pay your bills right now, starting a business is look, is something is admirable.
• 3:02
  SPEAKER_00: Yeah, I get it.
• 3:02
  SPEAKER_00: You want to do it because you want to get a better financial future.
• 3:05
  SPEAKER_00: But why don't you first do what one of my clients, Alima, did?
• 3:09
  SPEAKER_00: She got three jobs.
• 3:11
  SPEAKER_00: You know, she went out, she worked nights, she worked weekends, and she got herself in a position where she had, you know, I think five or six thousand pounds saved up.
• 3:20
  SPEAKER_00: And listen, you can save five or six thousand pounds in the next three or four months, and you can give yourself that safety net.
• 3:27
  SPEAKER_00: You can get Uber Eats jobs, you can get Amazon driver jobs, you can get, you know, other delivery jobs, you can do whatever you've got to do to hustle to just get the bank filled up, okay?
• 3:39
  SPEAKER_00: So, step one, get yourself a little bit of a buffer because there's no sense in trying to start a property business if you've got absolutely not a pot to piss in, right?
• 3:52
  SPEAKER_00: And all that's gonna happen, if you've got no money, right?
• 3:54
  SPEAKER_00: All that's gonna happen is this you're gonna be stressed, you're gonna be trying to make things work because you need to make money, you're not gonna be doing it properly, you're gonna be trying to take shortcuts, and ultimately it's not gonna work, you're gonna put yourself in a worse situation.
• 4:09
  SPEAKER_00: So take my advice on this, just breathe, take three months, get some money behind you, get extra jobs, do whatever you've got to do, sell stuff.
• 4:19
  SPEAKER_00: Like when I started in the world of property, I had no money.
• 4:22
  SPEAKER_00: So I went out and I sold everything I could sell.
• 4:25
  SPEAKER_00: So I had tools in my garage, I had my bike, I had go-karts that I used to have, I had cars that I didn't use, that I, you know, got as boy racer cars.
• 4:35
  SPEAKER_00: I sold whatever I could, literally, if I could sell it for£15 on eBay, I did.
• 4:42
  SPEAKER_00: Right?
• 4:42
  SPEAKER_00: And I would just build bank, okay?
• 4:45
  SPEAKER_00: That's number one, get yourself in a good financial position.
• 4:48
  SPEAKER_00: Number two, reduce your overhead drastically, right?
• 4:53
  SPEAKER_00: Reduce them.
• 4:53
  SPEAKER_00: You don't need the gym membership, you don't need the, you know, the the the Spotify, the Netflix, the Amazon Prime, the you know, whatever else you're paying for.
• 5:03
  SPEAKER_00: You don't need these things right now.
• 5:05
  SPEAKER_00: Listen, you gotta sacrifice some things if you want to get what other people have never got, okay?
• 5:10
  SPEAKER_00: So for the short term, sacrifice, cut back, reduce your overheads because for the first three to six months, things are gonna be tight.
• 5:18
  SPEAKER_00: So, you know, you're gonna have to accept that your lifestyle might have to dip for a little while, unless you've got a pot of a pot of money to play with, okay?
• 5:24
  SPEAKER_00: But I'm guessing you probably haven't.
• 5:26
  SPEAKER_00: So, strip back, okay?
• 5:28
  SPEAKER_00: Strip back.
• 5:29
  SPEAKER_00: That might mean not socializing, that might mean not going to the the the weekend event that you were supposed to be going to.
• 5:35
  SPEAKER_00: Who cares?
• 5:36
  SPEAKER_00: Who cares?
• 5:37
  SPEAKER_00: Work, hustle, build.
• 5:38
  SPEAKER_00: Yeah, work, hustle, build.
• 5:40
  SPEAKER_00: And then step three, when it comes to specifically lending, okay?
• 5:46
  SPEAKER_00: So specifically lending, I want you to start remembering about financial health and financial well-being.
• 5:53
  SPEAKER_00: Right?
• 5:54
  SPEAKER_00: Banks, lenders, they want to make sure that if they're gonna lend to you, doesn't matter if it's a bridging loan, doesn't matter if it's a buy-to-let loan, HMO loan, doesn't matter if it's a bank loan, they're going to want to make make sure that you're somewhat credible, okay?
• 6:09
  SPEAKER_00: So start looking at things like your credit report.
• 6:12
  SPEAKER_00: Like, so what's your what's your credit report right like right now?
• 6:16
  SPEAKER_00: If it's bad, fine.
• 6:18
  SPEAKER_00: Deal with it.
• 6:20
  SPEAKER_00: Like address it.
• 6:21
  SPEAKER_00: So, you know, go on to Experian or check my file or anything like that.
• 6:27
  SPEAKER_00: Download your report and and actually, you know, figure out what's going on.
• 6:34
  SPEAKER_00: I mean, when I started in property, my credit report was on the floor.
• 6:39
  SPEAKER_00: Like I couldn't borrow money to get a a friggin'£10 SIM card on a monthly basis.
• 6:46
  SPEAKER_00: And the reason being was because there was multiple charges on my account I knew nothing about.
• 6:51
  SPEAKER_00: So I had a Mercedes-Benz on vehicle finance, and that was actually showing us I had three of them, not one.
• 6:57
  SPEAKER_00: And that had massive negative impact on my credit report.
• 7:00
  SPEAKER_00: So I had to fix that, but I wouldn't have realized that until I started on property, and I wouldn't have realized that until I downloaded my credit report.
• 7:06
  SPEAKER_00: So go and get your credit report.
• 7:08
  SPEAKER_00: You can you don't have to pay for it, you can get it free of charge, right?
• 7:11
  SPEAKER_00: And ask yourself, do I recognise that account?
• 7:15
  SPEAKER_00: And if you don't, appeal it.
• 7:16
  SPEAKER_00: And if you've got things on there that are in arrears, call up the company, be proactive, put a payment plan in place, and just make sure that you're making their regular payments, and that'll soon start to fix your credit report, okay?
• 7:28
  SPEAKER_00: So there's that.
• 7:29
  SPEAKER_00: The next thing is clean up your bank statements.
• 7:33
  SPEAKER_00: So I get it.
• 7:34
  SPEAKER_00: We've all got things in our bank statements that sometimes, you know, you you probably shouldn't have on there, or you know, maybe it's that random payment from your friend with a funny a funny a funny line on the reference box.
• 7:46
  SPEAKER_00: But really, lenders don't really care so much about that.
• 7:49
  SPEAKER_00: But what they do care about is reckless spending.
• 7:52
  SPEAKER_00: So look at your bank account and and ask yourself, are you reckless with your money?
• 7:57
  SPEAKER_00: Are you continually going overdrawn, or are you cons can can um continually exceeding your overdraft and using unauthorized borrowings or unauthorized uh withdrawals?
• 8:09
  SPEAKER_00: Okay, things like are you having direct debits bounced on a regular basis?
• 8:13
  SPEAKER_00: Are you having payments fail on a regular basis?
• 8:16
  SPEAKER_00: Like all this stuff, it it is sort of it doesn't go well for you when they're cred the they're they're credit checking your bank account and they're checking that that your cre your affordability for things, okay?
• 8:27
  SPEAKER_00: Especially if you're looking to do rent-to-rent deals and things like that.
• 8:31
  SPEAKER_00: Like there may be a time where they you have to give a personal guarantee, and there may be a time where they want to look at your bank statement.
• 8:36
  SPEAKER_00: So just look, have a a main bank account, like so.
• 8:41
  SPEAKER_00: For instance, I've got a main bank account, it's my Lloyd's bank account, and that is a very clean bank account.
• 8:47
  SPEAKER_00: I pay myself a small salary in there every month, my household bills come out there every month, but I don't generally use it for anything else apart from a little bit of food shopping, maybe the odd meal out, something like that.
• 8:58
  SPEAKER_00: But I keep it quite clean.
• 9:00
  SPEAKER_00: Now, for those of you who know me, I play poker, so I I'm always going to casinos to play poker, and often I'll buy into a tournament with my debit card.
• 9:10
  SPEAKER_00: But you see, I have a separate bank account for that because you know, the Rovner casino flashing up on a bank statement that you're submitting to your bank for lending, it potentially looks like you've got a gambling problem, and actually you don't, like you're just you know playing a game of poker now and again.
• 9:29
  SPEAKER_00: Okay, so just be mindful of that.
• 9:31
  SPEAKER_00: Now, another thing with reckless spending is are you somebody who withdraws cash all the time?
• 9:36
  SPEAKER_00: Like the banks see that, and I was always told by my um my broker to be mindful of that because it looks like you're not able to manage your money.
• 9:44
  SPEAKER_00: So, for instance, if you take out£50 in the morning and then take out another£50 at lunchtime and then another£50 in the evening, you know, that looks like you're not managing your money very well.
• 9:53
  SPEAKER_00: So just be mindful of that.
• 9:55
  SPEAKER_00: Um, direct debits, bare minimal, um, and make sure you're you're paying them um is on time and as per schedule.
• 10:03
  SPEAKER_00: But I would have as few direct debits, um, only legitimate ones.
• 10:07
  SPEAKER_00: So like trying try and close them down, only keep the ones that are really, really important.
• 10:12
  SPEAKER_00: Um personally, I don't like lots of direct debits.
• 10:14
  SPEAKER_00: I like to get a bill and just pay it manually.
• 10:16
  SPEAKER_00: That's how I like to do things, but I am quite organized with that sort of stuff.
• 10:20
  SPEAKER_00: So some people aren't organised, but I am.
• 10:22
  SPEAKER_00: And the reason being is because I want to know what's coming out in my bank as and when I do it.
• 10:26
  SPEAKER_00: So I don't like money just randomly getting taken out of my bank, okay?
• 10:30
  SPEAKER_00: So there's a couple of tips, yeah.
• 10:32
  SPEAKER_00: Get your get a little bit of a buffer in place.
• 10:35
  SPEAKER_00: That's step one.
• 10:36
  SPEAKER_00: Step two, tidy up your credit report and just make sure you're aware of what's going on in your credit report and credit file.
• 10:41
  SPEAKER_00: And then step three, um, just make sure you've got clean bank statements, okay?
• 10:45
  SPEAKER_00: Above all else, right?
• 10:47
  SPEAKER_00: Remember, if you go to apply for lending, the banks, the the lenders, they are generally going to do a credit check on you, even if it's a business loan, um, and they're going to, they are going to ask certain questions.
• 11:02
  SPEAKER_00: So you've got to be able to come up with a good answer for them questions, okay?
• 11:06
  SPEAKER_00: So if your bank statements are not the best right now, today is day one.
• 11:10
  SPEAKER_00: Tidy them up, get them clean, and then in two or three months' time you'll have no problem getting lending.
• 11:16
  SPEAKER_00: Um, so that's the financial aspect of getting prep getting prepared.
• 11:20
  SPEAKER_00: But the next aspect of getting prepared is more logistical based, okay?
• 11:25
  SPEAKER_00: Like, I want you to actually be able to dedicate time to building something.
• 11:30
  SPEAKER_00: You know, we've all got these grand ideas of building businesses and, you know, getting out there and doing things.
• 11:36
  SPEAKER_00: But are you in the right like physical place or state to actually do stuff?
• 11:41
  SPEAKER_00: And what I mean by that is, are you, you know, are you getting enough sleep, for instance?
• 11:47
  SPEAKER_00: Do you have time where you can do this, or do you need to sacrifice other areas, including sleep, by the way, so you've got the physicality to actually dedicate the time to doing this.
• 11:58
  SPEAKER_00: You know, I get a lot of people who come to me, they've already got so much on their plate, and they're just trying to do more.
• 12:04
  SPEAKER_00: And I'm I I say to them, look, something's got to give if you want to do this.
• 12:08
  SPEAKER_00: So it might be you have to sacrifice, you know, social life, gym time, like you know, what you do, your private time, whatever, you might have to do that.
• 12:16
  SPEAKER_00: So you need to factor and figure out that out.
• 12:18
  SPEAKER_00: So figure out when are you going to dedicate time to building your business.
• 12:22
  SPEAKER_00: The second logistical aspect of it is where are you going to do this?
• 12:26
  SPEAKER_00: Do you have somewhere where you can go and work, where you've got peace, where you're not, you know, fighting with the kids or you know, at the kitchen, dining room table where you've got um your partner cooking dinner, the kids running around, the dog barking, and you're not actually able to focus.
• 12:40
  SPEAKER_00: So you need somewhere where you can go and have some focused, um, focused effort.
• 12:45
  SPEAKER_00: Now, if you haven't got anywhere in your house, you can go to a library, you can go to a cafe, just somewhere.
• 12:51
  SPEAKER_00: Like I work in my car a lot, believe it or not.
• 12:54
  SPEAKER_00: Um quite often I'll I'll go out and sit in my car, hotspot my uh my internet, and then crack on and just do some work in my car while I'm in the countryside and I do get a lot done.
• 13:04
  SPEAKER_00: And then the final thing is who have you got around you?
• 13:08
  SPEAKER_00: You know, who have you got around you supporting you and helping you?
• 13:11
  SPEAKER_00: Um because one of the things that you'll find in the early days of business is it it goes wrong, it's not always gonna be great, and you need somebody who you can contact who's not a friend, who's not a family, who actually understands what's going on and is not gonna have that secret I told you so underneath.
• 13:31
  SPEAKER_00: Because as much as you know your family and friends say they support you, they probably do, and of course they want you to win, and you'll have people around you who do want that.
• 13:40
  SPEAKER_00: But are they suitably qualified, let's say, to to help you out of a sticky situation, right?
• 13:49
  SPEAKER_00: And and that's why for me, mentoring is just so important, and it really, really is.
• 13:55
  SPEAKER_00: Um, I get mentored, I've I've just invested this year, you know, nearly$100,000 in getting mentored, and I'm always getting mentoring.
• 14:03
  SPEAKER_00: Like I'm I'm off to uh Los Angeles in two weeks' time, actually, um to attend an event with with one of my mentors, and I'm gonna be in a room of people that are miles advanced than I am, and there's a reason for that because these people have been there and done it, and that's why I'd say, you know, reach out, get the support you need.
• 14:22
  SPEAKER_00: Um but above all, remember this if you fail to prepare, you are preparing yourself for failure.
• 14:32
  SPEAKER_00: So give yourself the the give yourself the gift of the opportunity of actually giving this a good shot.
• 14:39
  SPEAKER_00: So put yourself in the right place to do so.
• 14:41
  SPEAKER_00: Alright, let's speak tomorrow.
• 14:43
  SPEAKER_00: Peace out.
• 14:44
  SPEAKER_00: Much love.
• 14:44
  SPEAKER_00: See you next time.
• 14:49
  SPEAKER_00: That's it for today, folks.
• 14:50
  SPEAKER_00: Thanks for tuning in to the Profit Entrepreneurs podcast.
• 14:53
  SPEAKER_00: Hope you got massive value from today's show.
• 14:55
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• 14:56
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• 15:01
  SPEAKER_00: It's 10 a.m.
• 15:02
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• 15:03
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