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How to make money from subprime?
Making money in the current market is difficult and limited. However any structural characteristics of an economy present logical opportunities to engage in. Every year in the UK over 100,00 people receive notification of the beginnings of proceedings to repossess their homes and this number can reasonably be forecasted to be growing.
Most people who fall behind on their mortgage do so because they are financially unsophisticated. They do not have the skills to dig themselves out of financial holes. Therefore there is a market for business' that offer in depth analytical advice on the appropriate strategy for reviving the health of people's finances. A reasonable fee to charge for such advice might be £100, therefore the annual market for such a business is £10 million.
Clearly there are free services such as the Citizen Advice Bureau, however these voluntary organisations cannot offer the same level of success as a private organisation with financial professionals who are by definition very good with money.
The moralist may argue that it is wrong to take money from people who are already in debt. However, you could add to your business model something similar to a 'no win no fee' approach, that is if the client does have their home repossessed then you refund their fee. A winning business model would seem possible from this once one realises that possibly around 80% of proceedings to begin repossession do not lead to the home being repossessed.
Clearly this is only just the start as once this business becomes proven as leading to greater levels of success you may be able to persaude banks to cover the fee for the financial advice as they would have a way of significantly reducing the amount of homes they would have to repossess.
Anyone reading this article must consider that this is just a sketch of an idea and you are urged to consider carefully or seek advice on whether this idea can actually work over the long term. Remember there's no success in business without failure.
If you have a business idea and you want it discussed on this blog then please email booking@maisonmascara.co.uk and we will consider it for inclusion into our 'reader's ideas' section in the future.
Please note that any information contained on this site may not be construed as financial or investment advice, please seek professional advice before making an investment decision
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