A few weeks ago I was fortunate to have Zillidy featured in The New York Times. How it happened is a really interesting chain of events.

I’ve reflected on the journey to determine what lessons can be applied to small business owners.

But first, here’s a recap of how Zillidy landed in the New York Times:

• February 4, 2013: After reading an article written by David Rosenbaum (Senior Editor of CFO Magazine) that one of my connections posted on LinkedIn, I reached out to David by email. I thought the article was well written and wanted to discuss some options that small business owners had to cope with the issues raised in his article. An hour after sending the email to David, he replied and we set up a time the following day to chat.

• After speaking with David he decided to write an article about how Zillidy can help fund small business owners.  The article was published on February 27 (and remained at the top of the Most Read and Most Emailed list on the CFO website for over a week).

• A few weeks later, after reflecting on the positive media attention and how it would not have been possible had I not used LinkedIn, I decided to write an article about the power of LinkedIn for small business owners.

• March 19, 2013: My article about how LinkedIn helped my business was picked up and published online by The Huffington Post.

• March 20, 2013: Krista Canfield from LinkedIn’s corporate PR group apparently found the article and tweeted the link to her followers. As the Twitter conversation below shows, that tweet led to me being part of a news story about LinkedIn. I had no idea who the journalist was, what publication or if/how Zillidy would be included.

• March 21, 2013: While sitting in a movie theatre with my wife, I got an email from Mark Cohen with the subject line “NYT article”. My heart started to beat just a little bit faster. We set up a time to speak. My phone conversation with Mark lasted for more than an hour. In addition to interviewing me about how Zillidy benefited from LinkedIn, Mark was interested in learning about Zillidy and how we’re changing the way small business owners think about accessing short term capital quickly. Mark has written some amazing articles about interesting businesses and great entrepreneurial stories (my recent favourite being his article about Marcus Sheridan and content marketing) so I had some high hopes for what could potentially happen.

• April 16, 2013: After not hearing anything or seeing any article come out, I was starting to lose hope. Out of the blue, I got an email from Mark saying that the article turned out well and that Zillidy made it into the article. My excitement started to build again but I had no idea when the article would be published. I spent the next few weeks searching online and waiting

• May 3, 2013: I got an email from a picture editor requesting a time to send a photographer to take my picture for the article. Now my curiosity was really getting piqued – why would they want a picture of me if the article was about LinkedIn?

• May 15: 2013: The article was published, first online and then the next day in the print edition. The wait was over and although the article was not about Zillidy, the reception was great. After all, it isn’t every day that your business is mentioned in the New York Times!

The entire experience got me thinking. Here are the 5 lessons I learned from this journey:

Look for ways to be helpful

Karma is real and can be great. It’s not about thinking about what others can do to help your business; it’s about focusing on ways to improve others’ business with no quid pro quo expected. Be proactive. I reached out to the CFO editor because I felt that I could add value to him with absolutely no expectation that he in return would also add value to Zillidy.

Use all available tools

This story is as much a social media story as it is a business story. Had I not actively engaged with LinkedIn, had I not embraced the concept of blogging in general or the opportunity to guest blog, had I not been on Twitter, none of this would have happened. The cost to me of doing all this was nothing other than my time. The benefit was priceless. Decide which are the most important business tools for your company and embrace them wholeheartedly.

Be polite and courteous

Thank people when they do something nice for you. Had Krista simply sent her tweet and I had not replied to her, the story would have been over. But she did something nice for me (by tweeting my article to her 5,300 followers) and that deserved acknowledgement. In thanking her, we initiated a conversation wherein she decided to present an opportunity to me. This leads to the next point:

Keep your eyes open for opportunities

You never know what opportunity may be just around the corner. Set your business up so that you can capitalize on those opportunities. This could be as simple as maintaining an updated profile on your personal and business social media sites, ensuring your website is accurate, relevant and current and always, always, always, respond when people reach out. It frustrates me when I hear business owners say that they get so much email that they can’t possibly reply to everyone. As my British friends like to say, that is utter bollocks. You see the email, we all know that, and you reply to the emails that you think are important, everyone knows that too. Take 10 seconds to reply to every email, tweet, LinkedIn message, etc. – even just to say that you’re jamming right now but will reply in due course. You never know where that interaction may lead.

Stay even keeled

As a small business owner, it is always a roller coaster and it is easy to think that the lows are just so terrible and the highs are just too short lived. I can promise you that your highs will never last forever but neither will your lows. Take things in stride, learn from the ups and downs and focus on growing your business.

Oh, and if you need short term capital quickly, consider a personal asset loan from Zillidy (I guess there are 6 lessons, the 6^th being always be selling your brand)!

I welcome your comments and feedback. Please share your thoughts either below in the comments section or contact me directly through any social media platform or the Zillidy website.

Every client asks about the value of their asset – be it a watch, a diamond ring, a necklace, bracelet, or earrings. “It depends” is the most commonly cited – and hated – response.

Various factors determine the value of an asset and all these need to be considered before its worth is finally determined. Only then can a decision be reached about how much money can be loaned against it.

Types of assets

InterGem Jewelry / Fashion Photos / CC BY-SA

Alternative, tangible or so-called hard assets are assets which do not belong to one of the four traditional asset categories – stocks, bonds, cash or property. Various such alternative assets and new asset classes are slowly appearing and increasing – such as fine art which, during the past few years, has been gaining ground as an asset class in its own right. Other alternative assets are collectible or luxury watches, jewelry, gold, silver and other precious metals, diamonds, and more. The past few years have seen a significant rise in investments in alternative assets because they offer a good form of diversification for investor portfolios. Furthermore, with this increasing trend, they are turning into an increasingly reliable source of value should one require to use them as collateral for a loan.

The value of an asset

The value of an asset depends, first and foremost, on its type. Some hard assets are more stable and established than others and are therefore more willingly accepted as collateral. These include luxury branded watches, precious metals, jewelry and diamonds. As an asset class, they have been around for quite a while (though the collectible watch market is not that old) and have very solid values which don’t change much over time or may even appreciate. Their worth is not directly influenced by fluctuations and crises in more traditional asset classes. Furthermore, hard assets are those that possess intrinsic value – that is, they have value by and of themselves. 

The value of hard assets varies so much because they are actually viewed and appraised as unique items. They have, therefore, their unique value and cannot be rated simply by the fact that they are of a certain type. The value of luxury watches, for example, is not simply determined by the brand but also by their condition, age, by whom and where they were produced (which is related to demand and supply), how many complications they have, whether they are a one-time piece or not, whether they are part of a collection or family heritage (or have historical value in general), etc.

Kim Alaniz / Foter.com / CC BY

Other alternative assets, such as diamonds, are also not so straightforward to value. But they are increasingly gaining ground. It has recently even been suggested that, in coming years, diamonds may outperform gold and precious metals as a hard asset because diamonds, unlike gold, have nearly no direct connection and exposure to speculative capital. Gold is, therefore, although very well established as a tangible asset, much more volatile (as we have seen lately).  Furthermore, now that De Beers no longer has such a monopoly and stranglehold on the supply of diamonds, these have also begun to be governed by supply and demand rules which has made them more stable, without making them cheap though. Diamonds are also appraised according to how rare and unique they are. For example, colored diamonds are much rarer and are therefore more desired and with a higher value.

With all that in mind, “it depends” is simply the most logical and honest answer that can be given about an asset’s value until it is fully analyzed. It is no accident that appraisers are entrusted with weighing up all the aforementioned factors and considerations before determining a loan amount.

Most people focus on the interest rate when they are inquiring about or comparing loan options. The interest rate is obviously important, but it is only one piece in the total cost of borrowing puzzle.

One of my greatest pet peeves is the lack of transparency in the financial services industry, especially when it comes to alternative lenders. Consumers and business owners looking for loans are routinely duped by lenders who entice them to sign up for a loan with them by dangling a low interest rate without fully explaining the true total cost of borrowing. By the time the client realizes they’ve been had, it is often too late to find another better loan option.

Here are the 10 key aspects of a loan that, together with the interest rate, form the true cost of a loan. Hopefully after reading this blog post, clients seeking loans will be better informed and can rationally choose the best loan option for them using full and complete information to make their decision.    

1. Due Diligence Costs

Diligence can be as simple as pulling a credit report or as in depth as conducting an appraisal of your assets or an audit of your financials. There are generally two types of costs associated with due diligence – time and disbursements. Before agreeing to a lender conducting due diligence, ask who is responsible for covering each of these costs and understand the magnitude of what these costs can be. Don’t give the lender free reign to spend as much as they want without implementing a cap.

2. Legal Costs

In order to secure a loan from a reputable lender you will be required to sign a loan agreement. Understand the scope of the transaction before you consent to the lender engaging legal counsel and make sure the lender lays out all the legal costs (including disbursements and taxes) ahead of time.  If you are entering into a longer term relationship with a lender, the lender may be inclined to absorb much of the cost in order to maintain the relationship.

3. Administrative Fees

Often lenders will charge a monthly fee to cover the costs of administering and monitoring the loan. This fee is charged regardless of whether you have a loan amount outstanding that month. A typical fee is between $50 and $100 per month. Some lenders will also charge an annual review or renewal fee.

4. Loan Term

You may pay a lower headline interest rate on a longer term loan but if you are forced to keep the loan outstanding for longer than you need it it may end up costing more overall. A $10,000 loan at an annual interest rate of 12% (1%/month) with a one year commitment will cost $1,200 in interest. However, if you only needed the loan for three months, you could have taken a higher interest loan (Zillidy charges 2.9%/month) and actually saved money by only paying $870 in interest, a savings of $330 or 28%.

5. Minimum Increments

Some lenders round up the loan amount to a set increment, usually $5,000. This means that if you need to borrow $5,500, you will actually be charged interest on $10,000. If you can’t negotiate away any minimums, try to make the minimum amount as low as possible.

6. Monthly (or Annual) Minimums

Often lenders will require clients to have at least a pre-determined dollar amount outstanding on a monthly basis in order to get the advertised interest rate and may charge a penalty if you drop below this amount throughout the month.

Some lenders may phrase this as an annual “true-up” where they calculate what the annual interest earned should have been and then require the borrower to top it up if the actual amount earned by the end of the year was lower than the expected amount.

7. Termination Fees

If the borrower wants to end the relationship prior to the end of the loan term, a lender may charge an early termination fee. The fee may be tied to a minimum annual dollar interest amount or it may be called a “security discharge fee.”

Another way that lenders can lock you in for a period is to write into the loan agreement that they require 60 or 90 days notice prior to terminating the agreement.

8. Transaction Fees

How does the lender advance you the funds every time you need to borrow from them? Do they wire you the money, deposit the cash directly into your bank account, send you a cheque or load a pre-paid credit card? These logistical questions can have a big impact on the cost of borrowing – especially if you are borrowing often. Lenders can charge a transaction fee each time they advance the money, and there are different costs associated with different ways of transferring money. Wiring funds can cost a lender between $25 to $40 for the outbound wire (which gets passed on to the borrower) and a borrower $10 for the inbound wire, regardless of the amount wired.

9. Insurance Costs

Different types of lenders will require different types of insurance and often the borrower bears the cost of that insurance. Some lenders may require you to have general business liability insurance, key man insurance or accounts receivable credit insurance. They may even require you to pay to insure the loan in the event you are unable to repay.

10. Intangible Costs

In addition to the actual dollar costs of a loan today, choosing the wrong lender can have long term implications. There are some lenders that can actually increase your borrowing costs in the future just by showing up in your credit report during the

The lowest interest rate doesn’t always mean the cheapest loan.

due diligence process. Payday lenders are the classic example that, if shown on your credit report in the future, will lead to a higher cost of borrowing. Loans that do not have an impact on credit score, even if they have a higher cost today, could actually save you money down the line by avoiding blemishes on your credit record.

There is also the opportunity cost to consider. Even if a loan carries higher costs, the immediate accessibility of the cash may still make it a good deal if you have an immediate profitable use for that cash. Some lenders are able to fund within 24-hours, whereas banks and other traditional lenders may take weeks or months to approve a loan.

If you have any questions as you’re searching for a loan, even if a Zillidy loan isn’t the right option for you, please feel free to reach out to me anytime and I’d be happy to help you evaluate your true cost of borrowing.

There are watches and then there are luxury watches. And while both measure time, the difference between them is enormous. Hence the price. Then again, there is a tangible difference between something being expensive (i.e. costing a lot but for a good reason) and being overpriced (i.e. costing excessively more than its value). Having a look at the production process of a luxury watch, like a Rolex, Cartier, Breitling or Patek Philippe, can give us an insight into how complex, costly and time-consuming a luxury timepiece can be when compared to an ordinary one that is produced by the thousands or even millions.

Development
There are a few stages in the production process of a luxury watch: the planning, the actual putting together of the piece and the finishing. All of these steps have numerous other steps included within them. Before a watch is actually produced it is planned, and sometimes even that can take a few years. Nowadays, watches are planned with computers by people who are micro mechanical engineers. The reason the planning can take so much time is that luxury watches are usually highly complicated pieces that can contain up to a few thousand parts. Bearing in mind how small a wrist-watch is, fitting inside hundreds or thousands of pieces certainly requires good planning.

Malenkov in Exile / Foter.com / CC BY-NC

‘Movements’ within a watch are what make up the engine of the watch. ‘Complications’, on the other hand, are all additional features that are “beyond the simple display of hours, minutes, and seconds”. Such complications can be a turbillon (a feature that counters the effects of gravity on a watch), a calendar, a chronograph, additional 12 or 24-hour displays, etc. The more complications a watch has, the more complex it is in its functioning as well as in its assembly. Furthermore, what distinguishes luxury watches from ordinary watches is their uniqueness in how they operate but also in how they look. Watch mechanisms and movements are like problems, and luxury watches are unique approaches to how such problems are solved – how it is all made to work together.

Dasha Gaian / Foter.com / CC BY-NC-ND

Assembly and finishing
After the planning comes the assembly. Unlike mass-produced wrist-watches, which are often made by machines, luxury watches are usually assembled by hand. This requires painstaking attention to detail and certainly also a calm hand. Manual assembly of watches means that more time is invested in the overall production and also means that their price goes up. While there are economies of scale for mass-produced watches, these do not apply for such unique timepieces, each of which may be between a few months and a few years in the making.

Manual production of watches is part of a long-standing tradition and history of craftsmanship, and requires a lot of professional skill. The Swiss, for example, are noted for their centuries-long tradition in the field, their attention to detail and expertise in micro mechanics, which is why Swiss watches have become synonymous with high quality. Furthermore, materials which are used for luxury watches are usually quite expensive themselves, such as precious metals and gemstones for the casing and the bracelet.

jwinfred / Foter.com / CC BY-NC-ND

Branding
Last but not least, the price of a watch is also determined by the brand and its history in making luxury timepieces. One quality of a luxury brand is the production of watches which have lasting value or even value which appreciates over time. Such watches usually have designs and styles that are not determined by trends but are rather made to last over generations – i.e. they have a quality of timelessness and are produced in a limited or even unique edition. Quality brands also have a commitment to each of their pieces and are quite dedicated to after-sales servicing because of all the hard work which was put into the production and design.

With all that in mind, it comes as no surprise that luxury watches are not as cheap as we might think they should be. Of course, one can wonder whether a watch can really be worth $11 million, like the The Henry Graves “supercomplication” by Patek Philippe, sold at Sotheby’s in December 1999. And while that may be a contestable claim, there is certainly no doubt that luxury watches are not just regular watches – they are masterpieces that are the result of the efforts of many people over a long period of time.

In the past few days we’ve had two very different requests for a loan come through our website inquiry form. Reviewing them both has shed some very interesting light that enabled me to compare the two requests.

Both clearly need a short term loan. Both have very valid reasons for needing the loan. One got a loan funded by Zillidy within hours of receiving and appraising their asset. The other didn’t get a loan from Zillidy at all. Why?

The answer is simple: research and preparation. This differentiated the client who got the loan from the potential client who didn’t. I decided to write this blog post so that prospective borrowers can prepare prior to searching for a lender so that they don’t waste their valuable time spinning their wheels with a lender that isn’t a good fit in the first place.

Research lenders BEFORE reaching out

People spend more time picking the right piece of fruit than picking the right short term lender.

Research is absolutely key to getting a loan. There is a great TV commercial for an auto insurance company that shows that consumers will spend more time picking out the right piece of fruit in a grocery store than they will researching the right auto insurance option for them. I always thought that commercial was interesting and it stuck with me. Now that I run a loan business, I can totally relate with that auto insurance company. Getting a loan by picking the right financial partner is really important. Yet I find that prospective clients don’t spend the time to get informed and yet expect lenders to throw money at them.

It is not enough to do a Google search for a term like “short term lender” or “business loans Canada” and then click on the Zillidy website because it ranks high and then fill in the form without ever reading any part of the website. Trust me, we’ll know based on the way the form is filled in whether the prospect actually understands what they are applying for. It is highly unlikely that we’ll be able to provide a loan to this type of lead because 9 times out of 10, they will not understand what it is we do, what they need in order to get a loan, how much a loan costs or what the terms are. Yet all this information is clearly laid out on the website. Had the prospect read even one page of the Zillidy website, they would know immediately that in order to get a loan from Zillidy they needed to have an asset that can be acceptable as collateral, and that the asset can not be a 1981 pickup truck (the number of requests we get for car loans is shockingly high!).

As a borrower, it is critical that you fully educate yourself on the type of lender you are approaching and how that lender can fit with your needs.

An educated client makes a strong borrower

Now let’s contrast the above type of prospect with the prospect who did get a loan from Zillidy. This client also did a similar Google search for loan options. When she clicked on the link to the Zillidy website she proceeded to read almost EVERY SINGLE page on the entire website, including all of the newspaper and magazine articles written about Zillidy. Once she felt like she understood exactly what Zillidy did and the type of loans we make, she did her research on me personally, including visiting my LinkedIn profile and (apparently) Googling my name. After all that, she sent us a message through our live online chat and followed it up with an application with an attached picture of the asset she wanted to use. Finally, she requested a call to ask us some final questions. When we had the call with her, we didn’t have to educate her at all about our services. She didn’t ask any question where the answer could be found on the website. This person knew what she was looking for, determined that Zillidy was the right lender for her and now was ready to consummate the transaction with us. This may sound like a lot of work but the entire process doesn’t have to take more than 20-30 minutes (could be faster if you’re a fast reader!) and after all, what is the right amount of time to spend before committing yourself to a relatively large loan agreement?

The client in the above example that ultimately got the loan was so thrilled with the service and the process that she recommended Zillidy to several colleagues of hers and has sent us additional assets to get an additional loan. Why? Because the process worked the way it was supposed to work since she was fully prepared right from the initial contact.

It takes a lot of effort to make a loan process look effortless! When both borrower and lender do their homework and come prepared, the process seems easy and seamless. Whether it is a Zillidy loan, an auto loan or any other type of loan, make sure you do your homework before approaching the lender. An educated consumer is the best type of consumer for lenders and just a little basic research will make the entire process seem easy and you’ll be much more likely to get a loan funded quickly.