Today I’m going to talk about Micro financing. For those who have not heard the term Microfinancing is the provision of funds to micro-entrepreneurs or small businesses that can’t get access to funds. Microfinancing is usually dealing with low-income individuals. Banks and other investors are not willing to loan to this clientele. These micro-entrepreneurs rarely have assets expensive enough to be used as collateral. Additionally, banks incur a steady cost every time they create a loan but gain revenue variable to the amount of the loan. This means if the loan is too small, as is often the case with poor individuals, banks would be losing money even if the loan and interest are paid on time. With no other options these people are forced to borrow from moneylenders who charge exorbitant interest rates, sometimes exceeding 100%!
The only way for Microfinancers to stay afloat is to charge high interest rates. ( personally i disagree ) you can do it like us at Micro4Women at $0 interest rate! but The most common reasoning is that individuals need to be closely monitored if they are going to pay back the loans. They often need to register for courses or attend weekly meetings to procure these funds. Unfortunately, these meetings and courses cost money which just adds to the cost of the loans forcing Microfinancers to increase interest rates. These rates make it harder for the borrowers to pay back their loans and often can put them in even worse financial situations. Currently, Microfinancers are looking at new ways to ensure they receive their loans back. Some are experimenting with online presences being the encouragement rather than physical. Individuals who are loaning the money are directly in contact with the borrowers. Without the extra costs, Microfinancers can lower the interest rates and borrowers can more easily pay back the money.
an example our visit to Jordan proven others ways to help: http://youtu.be/lLuyP9zQ_BE
Microfinancing has become synonymous with charity in many locations. It is important to remember the key difference that Microfinance should only be given to individuals who are looking to increase their income. Their goal is to eventually pay back the loans and become self-sufficient. Charity should be reserved for those who are so poor that they would never be able to repay the loans. Microfinance is a step towards eliminating poverty, but has to be performed flawlessly to succeed.
After Hurricane Sandy hit, I donated gas and services to organization with many years of disaster relief experience. I believe strongly in the work that we are doing in the aftermath of Hurricane Sandy and call on everyone out there to participate in the relief effort.
Above is a picture of me with the Consul General of Israel to New York, Ido Aharoni. Together, we distributed gas to members of an affected community at a synagogue right before Shabbat, in Rockaway, New York.
In the aftermath of Hurricane Sandy, I have been donating my time and services to help those in the affected area. I have been volunteering with an Israeli global humanitarian organization with many years of disaster relief experience, and offering my time and equipment. I believe strongly in the work that we are doing in the aftermath of Hurricane Sandy and call on everyone out there to participate in the relief effort.
We have been distributing large quantities of gas to hospitals as well as other supplies including food, batteries and generators to Hurricane Sandy victims. Having Israelis on the ground in New York and New Jersey has allowed us to expediently facilitate the delivery of supplies to affected citizens in New York, New Jersey and Connecticut. We have been working in coordination with FEMA, local police, the American Red Cross, and Jewish communities in the affected areas.
I wanted to give people reading my blog a better idea of who I am and where I came from. I’ve written a short synopsis of my life as an entrepreneur, outlining the businesses I’ve been involved in and the path I’ve taken to get me to where I am today. Enjoy:
Like any young Israeli, I joined the military when I was 18 years old. I had always dreamed of becoming a pilot, and was accepted into the military’s pilot training course. During the screening and training period, the air force realized I wasn’t the kind of guy who was going to follow all the rules and think inside the box like a trained pilot should. With a margin of error of just milliseconds, flying a plane is a rigid and rule-oriented craft. After it was decided that it was too risky to let me fly a plane, I was grounded for a year and told that I had to wait until I got a little bit older to resume my training. I left the military at age 22, graduating as an Officer. I’m 40 years old now, and I still think outside the box and challenge everything possible. I guess I had to give up my dream of being a pilot to be where I am today. Looking back at those days, one could have never guessed where I’d end up or the path I’d take to get there.
It’s actually a funny story how I got into the auto rental business. When we first moved from New York to Arizona, my wife and I purchased a Chevy Suburban for $7,500 and drove it across the country. We parked the suburban at our friend’s business in Tucson, and a week later it got stolen. The insurance company paid out $13,500 for the car. This is when I first realized there was a real difference in prices from East to West. I saw the market opportunity in this discrepancy and decided to capitalize on it. Cars in the West were worth more than cars in the East, so I started buying cars in the East and shipping them out West and selling them for more money.
I was shipping cars in one direction but realized that when the trailers used for transporting the vehicles out West headed back East, they were empty. I didn’t want the vehicles to go back empty so I opened a transportation subsection of my business, shipping cars across the country for those people who had been in Arizona for the winter looking to head back home in the spring. With my transport business, I was able to take advantage of a previously unexplored niche market.
In 1994 I went back to school; I was taking classes at Davis Mountain Air Force Base because I was a little bit older. Living and going to school in an area with such a young demographic, I started to ask myself why soldiers under the age of 21 could fly 20 million dollar planes but not rent a 300 dollar rental car. Because I already had cars in my inventory, I expanded my business and began renting in the previously untapped under-21 market. My auto rental agency was called AAA Auto Rental, and allowed me to capitalize on any idle inventory I had and increase the scope of my business.
I learned a few lessons about how to make it or break it in the auto rental industry during my time operating AAA Auto Rental. I began to understand even more deeply the importance of providing a service or product that fills a need. After years spent familiarizing myself with the industry and gaining experience in the auto rental space, I came up with a new idea I believed had immense potential. Leaving behind a business that could only go so far, I sold AAA Auto Rental in 1997 and set off in pursuit of my idea.
A good friend of mine was getting an MBA at the University of Arizona. He came to me and told me about a competition at the business school for a start-up internet company and asked if I had any crazy ideas. As a matter of fact, I did. With the increasing popularity of the internet as a means of conducting transactions, I had been thinking about an innovative way to sell cars taking advantage of this advance in technology. I realized the best possible way to sell a car was when it was on rent. Using the internet, you could sell a car to a retail customer without having to take the vehicle off rent and without ever seeing the customer. We submitted our business plan and won the competition. And so, automoti was born.
EBay was growing at the time and looking for partners. I worked on developing automoti.com on eBay motors between 1999 and 2001; we became the largest seller on eBay in our early days. Automoti operated successfully for many years, but September 11th brought with it a shock to the auto rental business. The rental business got beat up financially as a result of the attacks and all of my customers went out of business. I was in a difficult position, but decided that it was too early to get a big rental company on my radar because most of the rental car inventory was buy-back (guaranteed to be bought back from the factory). I shut down the operations at automoti and pursued another passion I never knew I had.
In 2003, I got into the movie business. My foray into the film world happened purely by chance. I was living in New York City at the time and had gone to see a movie that was opening a block from where I was working on the Upper West Side. The movie was called Dummy, and was about an ex-office worker who becomes a ventriloquist and communicates with the people around him using a dummy. Opening night, and the theater was empty. After the movie, the producer and some of the actors came out to answer questions from the audience (all two of us). I asked the producer why he decided to open a movie catered to a Jewish audience on the eve of Rosh Hashanah in one of the most Jewish neighborhoods in NYC. In reply, the producer asked me, “Can you help?” I went to the movies with a need to be entertained after a hard day’s work and left with a new job.
I worked in movie production between 2003 and 2006 as an executive producer, marketing movies and reveling in my new-found status as a member of the Hollywood elite (kidding! but I did actually have dinner with Clint Eastwood and many others). I helped produce and market movies with Quadrant Entertainment, working on the movies Dummy and How to Seduce Difficult Women.
After a few years’ hiatus, I found my way back into the automotive space. In 2006, my friend Jeff Schneider opened a Thrifty Rental Car franchisee in Northern New Jersey and asked me if I could help him sell cars on the internet. At the time, the industry was shifting away from buy-back. We decided to raise a little bit of money and resume full-time operation of automoti.com, competing with eBay motors and selling rental cars on the automoti site. The business was very successful, and culminated in the sale of the platform to Hertz in 2009.
During the period of time when I was running automoti, I recognized that in order to have a higher conversion of cars sold you needed to have an original image of the vehicle. This is what was demanded by the customer and therefore required by any successful car rental business. At the time, my brother was working at Fox Rental Car at LAX, one of my previous clients, and manually taking a picture every time a car came back from rent. Then another guy would do an inspection, marking everything down on a piece of paper. I decided to marry these two tasks and create a system that could do the exact same thing but more accurately and more efficiently.
In 2005 I began development of a patent-pending camera system that can read the odometer, log the amount of gas left in the car, and take photographs of each vehicle from every possible angle. The system’s design is meant to minimize overhead at the rental car company by conducting a fully-automated inspection of each vehicle and closing the rental car contract without using human capital or additional resources. A camera system that can read the odometer, log the amount of gas in the tank, and do a full inspection of a vehicle returning from rent makes the process of closing a rental contract infinitely more manageable.
Recognizing that the business model of the automoti platform sold to Hertz had great potential, I decided to begin working on a new platform. The new business was called Rent2Buy, and was based on the same premise on which I had built automoti: allowing people to try things before they buy them while using the internet as the intermediary eliminates transaction costs and maximizes customer satisfaction. The Rent2Buy e-commerce platform would be all-encompassing, dealing not just in the car rental space but moving into the housing industry and beyond to other smaller but promising markets. Rent2Buy is still in the works today, as we continue to expand all segments of the platform and increase the ease in which people can conduct transactions seamlessly over the internet. You can visit the Rent2Buy site to see what we have to offer or visit the Rent2Buy Blog to learn more about the business model and what’s in store for the future.
Fuel Recyclers LLC is my newest venture. Fuel Recyclers is an environmentally conscious fuel recycling business. We recycle fuel from vehicles being sold at auction, returning from rental, coming off of a lease, or being impounded after an accident. Instead of leaving gasoline sitting in these vehicles, we extract the fuel so that it can be used in a more efficient and productive way. I got involved in the business as an entrepreneur, seeing an opportunity and taking it. It is also in line with my desire to operate more socially conscious and environmentally sustainable businesses.
My entrepreneurial spirit is what keeps me going. I am a father, a husband, a son, a neighbor, a business owner, a consultant, a world traveler, a philanthropist, etc. But I am first, and foremost, an entrepreneur. Being an entrepreneur is not a profession, it’s a personality. It translates into every aspect of my life, from the way I work, to the way I raise my family, to the way I vacation. I love what I do, and I wouldn’t have it any other way.
You may recall that last August, Automoti.com sold its assets to Hertz, one of the best-known names in the rental space worldwide. That was very exciting for us at Automoti Group. Hertz’s rent-to-buy website completely raises the bar for what a rent-to-buy marketplace should be. When you visit Hertz Rent2Buy you see great prices and a fabulous selection of cars in a huge variety of makes, models, and colors—available at many locations across the US. It combines Hertz’s first-rate fleet of cars and fantastic customer service, with unmatched technology that makes executing and managing rent-to-buy transactions a breeze.
Great Kiva mention in the Seattle Post Intelligencer last week on gift-giving that really matters. Kiva, “the world’s first person-to-person micro-lending website,” allows donors to offer small loans to low-income entrepreneurs; Kiva is offering gift certificates that go toward $25 micro-loans. $25 isn’t much money for many of us, but it’s a hefty capital injection for new businesses among those who are less-well-off.
The author of the piece, Carol Pucci, tells of how she and her husband lent a total of $50 to fund two Bulgarian businesses—one, a woman who sold socks, and a second, a couple that chops wood. When the businesses repaid the loans, Pucci and her husband re-invested the funds with entrepreneurs in Cambodia, Vietnam, Sudan, Afghanistan and Tajikistan. Pucci mentions that the average Kiva loan recipient’s payback rate is surprisingly high: a remarkable 98%.
If you’re not familiar with Kiva organization, I’d get acquainted by reading up on Kiva’s featured entrepreneurs. They’re really a remarkable group of people—and, with the help of just a few donors like you, can be the faces of a better world for developing nations.
I’m a Kiva donor and participant because I really believe small, short-term relationships have lasting effects, and that the Internet is a great facilitator for making those relationships happen. I’ve built my entire business around that idea—rent a product online now, and you may just buy it down the road; offer a small online loan, and you can change the world.