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The Value of an Account

What if I told you that for 12 hours of work, I would give you $300 plus one share of stock which paid a $30.00 per month dividend and had a resale value of $900? Does that sound like a good deal to you? That is how much an average account is worth: not a […]

What if I told you that for 12 hours of work, I would give you $300 plus one share of stock which paid a $30.00 per month dividend and had a resale value of $900? Does that sound like a good deal to you? That is how much an average account is worth: not a huge account, not a multi-location account, just an average single location account sold under the right compensation program. Many of you may not know this, but the residual on your accounts is worth an immediate cash value if you sell it back to the processor.  Most processors will pay out roughly fifteen times the monthly residual up front and another10 times residual slowly over the next year if the client stays on board. They pay this in exchange for receiving all future residuals that you would have received. So they are basically betting the customer will stick around longer than 25 months. Each time you make an average sale, your personal net worth goes up by $900.

I am not recommending that you sell your accounts back to the processor, actually quite the contrary. I am suggesting that you should hang on to them. I challenge you to really think about how much work it takes for you to get one sale. Then ask yourself, “Is that amount of work worth $300 in up front money and a net worth increase of $900?” You might get a customer call, and you realize that in order to make the customer truly happy you need to go twenty minutes out of your way. Ask yourself, “Is twenty minutes of my time worth $900?”

The first time I saw my buyout amount in the residual report, it was awesome! I was new with a processor and only had 10 accounts that had been active the necessary three months to qualify for buyout. They were all very small accounts. The buyout amount was $5,400; I just couldn’t believe it. I called the processor and said, “So, do you take back the compensation you paid me already?” They replied, “No, you get to keep your up front compensation; we are just buying the future residual.” Some of you are excellent sales professionals. If you really put your time into this business, you could get a lot of accounts. However, you just can’t seem to really put 100% into this business.

I challenge you to sit down and think for a while about how valuable these accounts are. Get yourself motivated to go out in the field and get sales. Then stay motivated to service your clients over the long haul. Trust me, when you get to the point where you can walk into a referral and say, “I have been servicing these ten businesses in your city for 2 or 3 years” …the sales come very easily to you. Many of you who are good at what you do could easily get 100 accounts in 6 to 9 months. Once those 100 accounts are all active, you could have a residual income stream of $3,000 per month and a net worth of well over $60,000 in liquid assets. It would be like having $60,000 in the bank and an automatic interest payment on the $60,000 of $3000 per month. What an amazing deal!!!

In closing, here are the main reasons I wrote this article:

1. I wanted you to realize that you are building a lasting business that is providing a substantial increase to your net worth via liquid assets each time you make a sale.

2. I wanted you to allow this knowledge to motivate you to stick it out during the tough times and keep selling. Realize that even when you have a week that you only make a few hundred dollars in up front money, you probably increased your liquid net worth by at least $500 in addition to the up front money.

3. Hopefully the realization of how valuable your accounts are will also motivate you to provide excellent service to your existing clients to protect this valuable asset. Have you done a buyout? If so, share your story in the comments below so that newer sales people to this industry will see how this process works. Let us know how much residual you sold and what multiple you received up front and over time.  Your comment will motivate the newbies who read this post to build their business.

Make it a great day! James Shepherd

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