A £12M Loan, a Delayed Deal, and a Lesson in Resilience

Originally sent exclusively to The Letter subscribers on March 31st. Want to be the first to get my personal newsletter in your inbox every Monday at 7am? Subscribe for free here.

Tough times make tough people.

My God, I have had a tough week. On the face of it, I have experienced some wins.

We held a brilliant seminar for my buying business masterclass, which we sold out. We had so many attendees that we had to order some emergency chairs and tables.

I secured some amazing deals and obtained funding for future projects.

I have great bank managers who support me and love what we do.

This new funding is for a 12 million loan, with a cost of funds at 2% over base, spread over 25 years, along with some arrangement fees - heaven knows why they charge such fees, you'd think the interest is enough!

Borrowing over a longer period is like a magic trick for creating cash flow.

Yes, you pay more in interest, but it provides our company with extra cash flow by spreading some short-term vendor finance debt (vendor finance is basically seller finance on short term payment plans) over companies we have acquired in recent years and some new freeholds.

Instead of finding £300,000 a month, we will now only need to find £150,000 a month, even while borrowing more money.

Mastering the creation of cash flow is something great entrepreneurs understand.

Even if you have all the money, if you can use the bank's money and invest yours elsewhere to achieve higher returns, it’s just smart working in my book!

If you can borrow at 2% over base - that’s 6.5% at today’s rates - and you can invest your money to make 20%, why would you pay off your debt?

That’s why I only pay the interest on my house mortgage; I’d rather have my cash working hard than paying off my debt.

One day you will sell some loot and pay your debt off, which should be heaps bigger because you're an investing whizz kid!

The years and decades I've pilled into entrepreneurship taught me a thing or two about how banks operate in lending: they prefer backing sure things - winners with certainty and clarity.

They also take their time to get things done - they’re not quick workers like us entrepreneurs.

We act creatively and swiftly to accomplish our goals.

I prefer to get things over the line, with short term, fast private capital or vendor finance.

This process might cost you more and cause short-term pain, but I think it’s worth it.

You can then bring the banks in on a refinance, where they prefer to lend to you when you’re already running a business over lending for a new idea.

Banks also love to see how their lending will create more cash flow.

It makes them feel warm and fuzzy inside. This was a trick I demonstrated with my £12m loan.

Here’s a tale for you: I bought an industrial estate using vendor finance.

I paid the deposit to the sellers and made monthly payments because the bank behaved like a yoh yoh in their decision making - I've no time for this bipolar decision making, I just want to move on to the next project not wait for a bank to flip flop.

Three years later, I replaced the vendor's debt with bank money.

We managed to get the deal done quickly and this gave me 36 months to prove to the bank I could run this industrial estate and pay the debt down.

FYI - the sellers were protected with charges and personal guarantees, just like a bank.

This week, I was also excited to secure a brand deal, working with QuickBooks to create content for them.

That was a proud moment for me, working with one of the world's biggest accountancy software providers! (We have only ever collaborated with a handful of brands, all of whom are mega stars. We could have easily settled for shoddy sponsorships, but staying selective has protected us and allowed us to pull people to us rather than push for deals)

TOP TIP: PULL NOT PUSH - Great businesses attract opportunities rather than chase them.

I call this "pull not push". Trust me you want some of it, if you want to charge more and make more.

Getting yourself some establishment, brand reputation, awards, and fame all help in this regard - it’s a rare and protected form of leverage.

This is why acquiring an established business with those attributes can propel you ahead, allowing you to attract rather than pursue. It’s like cheating the system.

That all being said, I was feeling down in the dumps. I was miserable to be around - ask my wife.

I was moody and disappointed. I don't mind admitting that it was more than that; I felt sad.

I was in the midst of completing a project that consumed my every moment for months on end.

I was excited to close it, to rest my brain, and breathe a sigh of relief.

It was so close to fruition, but the deal needs another flipping encore.

We were plagued by yet another delay - a delay I couldn’t control.

I had signed papers, dotted the "i"s, and crossed the "t"s on legal contracts; we were ready to complete this big whopper of a deal.

But the other side encountered a hiccup.

I tried all the self-talk, went for a walk, and reminded myself that it wouldn’t be long, pumping myself up like I do for others.

I told myself to discipline my disappointment and brace for awkward conversations.

The truth is I just felt fed up.

I went home early and sought comfort from a blanket and a cuppa.

Yes, you guessed it: it was Yorkshire Gold, made with proper milk - none of that low-fat nonsense - and a biscuit (a chocolate Hobnob, if you’re interested).

A cup of Rosie Lee and a chocky bicky made me feel better.

I reached out to my mate James, just by text, to offload. James said:

“Just remember you’re James fucking Sinclair, and in 10 days, it’ll all be over.”

He’s absolutely right: the temporary setback is just that - temporary.

I know it; it’s not months or years, it’s days. So why did it hit me so hard?

I’m just tired of it. My team is too. I realised that I’m happiest when I have momentum. I usually wield power over momentum in most situations, but this time, I didn’t.

You readers out there might be feeling the same way in your lives.

You’re entrepreneurs; you’re judge, jury, and executioner.

You decide if it happens. You go out there and make it happen. Your energy pushes life forward - the harder you work, the luckier you get.

You know it’s not your lack of resources that brought you to this point; it was your resourcefulness that crowned you as a mover and shaker.

But when forces beyond your control stop your momentum, it feels like a freight train has struck you.

You never know when the world will throw storms and rain clouds your way, but when it does, we must learn to dance in it.

There’s no such thing as bad weather - just bad clothing.

I put on a jumper and coat and tap-danced in that flipping puddle.

I said to myself:

“Go get 'em, Sinclair.”

The alternative isn’t worth it.

If you don’t want to borrow money, perhaps robbing a bank is a better idea. If you do choose to rob a bank, make sure you do it naked - this way, no one will remember your face.

To your continued success

James

PS. I’m hosting an evening show at the Leicester Square Theatre in June, it would be great to se you there - Details here.