Business Classes

[Sandy Paris]

I signed up for Business Finance classes hoping it will help me with numbers. Does anyone think this is a good idea?

[Bill Gulley]

Very good choice and it will absolutely help in RE, as RE is part of the financial industry. Introduction to Business Finance is an basic overview of financial management and lightly examines the use of funds, timing of work flows and capital requirements. Types of investments available to businesses, use of bond financing and stock as well as depository accounts. You'll be learning financial performance ratios and when they are applicable, an area often abused by RE investors. Learn it all, don't go in with a preconceived idea that the material has to be applicable to RE as most won't be initially.

It gives a big picture of management concerns in business, you'll probably look at examples from large corporations like GE or Ford and you'll look at small operations. Expect to see different types of business structures.

The Uniform Commercial Code, SEC, Treasury and financial regulatory functions will be touched on. How government influences financial management decisions along with taxation. It is not an in depth study but an overview.

You'll look at economic and business cycles, start ups to mature business operations. You'll see that finance takes in aspects of all other business functions or specialties, such as accounting, marketing, management, inventory and process of work flows as you are measuring the efficiency of the overall business.

It's not going to teach financing in residential RE, you will probably touch on commercial financing in a conventional sense. It's not going to be a creative financing class but what it will teach is the use of assets which is what creative financing is based on.

As to difficulty, it's a class usually offered at the 2nd year of undergraduate work in college. You will have some basic statistical analysis that will be explained in class, you don't need statistics class. Probability distributions will probably be used but it's nothing more than weighted averages and you don't have to come up with probabilities, so it's nothing a 9th grader can't do. Accounting 101 and 102 is generally required or helpful, but only to the extent of understanding the effects on assets, liabilities and reading financial statements in a management decision, but again you can catch on.

How will it help in RE? It will give you the foundation to understand the financing system and flow of capital, economic considerations and banking as applicable to you. With this foundation you should be able to basically assess any small business operation, meaning you can better judge what commercial tenant you might select. You can see if partners, like a contractor can carry off a job without going broke trying (no, you don't get their financials for a rehab, but through general conversation you'll find how strung out they may be, you'll get an idea of their overhead and you'll make a better informed decision).

I taught the class many years ago, while much has changed, much remains the same. I suggest you ask questions and participate (don't take over the class, LOL) hopefully you'll get an instructor who has financial experience that can relate the materials to real life instances and not just read the book. That would be a plus, but just taking this class will broaden your thinking which is the key in making deals, deals come from ideas and selecting the appropriate methods to transact any business. Good luck! :)