Here’s what these business terms mean when used in conjunction with the Sports Betting Reinvented formula.
Market Study
As most serious businesses do, we’re also conducting a market study at the beginning of every season. The goal of this market study is to assess how each of your 30 businesses is performing before committing some significant capital to them.
In both sports we’re using, there are always some players, coaches, general managers and other movement of personnel during the off season. Most of it happens in the form of people signing with another team through free agency, trades and draft picks.
You then want to have a close look at the performance of each team. No one else that we know of in the sports betting industry does that. Everyone seems to be too anxious for placing bets as soon as a season opens. We prefer taking some time at the start of every season and have a clear picture of what’s going on.
Corporate Entities
We’re treating each team as a separate entity. This is exactly like having 30 corporate operations each located in a different market or city. All of the wagers our algorithm generates are in reference with a particular team or entity. We even split each entity in two branches, home and away.
This is achieved by keeping track of the home and away sequences in a completely separate way. This insures there’s always at least one of the two branches making short term profits most of the time.
Year Round Operation
We’ve selected two sports, baseball and hockey, which are perfectly complementing each other and giving you a formula you can operate year round. We’re not placing any wagers during the playoffs of any of those two sports.
The way we’ve built this formula is through recouping inventory in future games. With short series like best of 5 or best of 7 in the playoffs, there are not enough games for what we’re doing. So, the NHL season ends in the first week of April while the MLB season is starting that same week.
Baseball season end in the first week of October and the hockey season starts in the first or second week of October. That’s an ideal match.
Working Capital and Cash Flow
Every business needs some working capital and needs the necessary cash flow for operating securely. Here, your working capital is, at first, in the form of your initial capital for starting a season.
The amount of your working capital is what you have for making sure it is in sufficient amount for providing you with the necessary cash flow for sustaining your operations. We’re achieving that by applying a divider constant of 75 for both sports to your working capital which is giving you the amount of your “per win” profit.
By using that “per win” targeted profit, this guarantees that you’re having the money you need for sustaining the times where your inventory gets higher.
Assets
In this business, your assets are mostly in the form of cash. You could extend that to the inventory, but it’s also pretty much a virtual inventory. The other forms of assets are the corporate entities for which you don’t have a single penny to pay. All the team owners are taking care of that for you. You could almost see yourself as being the owner of all of them since they’re virtually all working for you in the sense that they’re generating your profits.
The best thing being that you don’t have to deal with the overhead and the management of the workers.
Profit margin
This formula operates with a pretty high profit margin. Unlike grocery stores which are making pennies per article sold or other kind of businesses operating at 20% to 35% margins, yours is much better than that.
Most sports bettors can’t look at what they’re doing in the same way you do because they have no plans and no logical behaviour towards their bets. The solid way you’re operating will transfer to very good profit margins.
When you’re placing a wager in the morning or the afternoon of a game for making $100 with odds for instance at -150 and you win that wager, you’re getting a profit $100 out of an investment of $150. That’s exactly like buying something for $150 and reselling it the day after for $250. All depending if you’re looking at your profit margin in reference to your cost or your selling price, you either come up with a profit of either 67% or 40%, in a day!!
You sure sometimes have to wait for some days before realizing that profit and the longer you wait, the smaller it is in percentage but you’re still getting a very good ROI and you don’t have to manage depreciating physical inventory.
Inventory
This formula is based on recouping the money wagered and “lost” when a team loses. We treat it as temporary losses since we’ll be getting it back in future games. Those temporary losses are more like inventory being in stock and waiting to be sold. When recouping that money plus your “per win” profit, it’s exactly like selling back that inventory at a profit.
Making a sale
All businesses have to make sales of some form for making money. Some are selling physical goods, others are selling services. Your sales are in the form of wins. Every time a team you’re having a wager on wins a game, you’re making a sale and generating a profit which is your per win amount.
Operating Costs, Insurance Costs and Inventory Write-Off
Operating costs and insurance costs are something that all businesses also incur. This is part of doing business in any way. You normally have to pay for something when operating any kind of business. With Sports Betting Reinvented, operating costs take place when a team you’ve started placing wagers on is going on a 4 straight game losing streak and insurance costs occur when you’re using the maximum wager technique for preventing large losses.
For the operating costs, we’ve decided to put the threshold at four losses. At that point, we’re not investing any more money with that losing team. It’s going through a bad period and we’re not pouring more money into it. The inventory has become unsellable and those things happen. You’re then proceeding with an inventory write off. The same principle is true for the insurance costs.
Others have operating costs in the form of salaries, mortgages, inventory, real estate taxes, maintenance, vehicles, utility bills etc. and they have to continuously deal with them. Your operating costs, including insurance are in the form of inventory write offs.
Balance Sheet
This formula keeps a real-time balance sheet at every moment. After placing your wagers for the day, you have the up to date picture of your business’ financial situation. The next day, after entering the winner or the loser, you again have your up to the minute balance sheet. Not many businesses can do that.
You’re also using that balance sheet daily for revising and scaling up your targeted “per win” profit by using it to find out exactly how much cash you’re currently having on hand and also how much your inventory is really at.
Money Management
This one is pretty much self explanatory. It globally puts together many important parts of running a real business like the management of your cash flow, how much “per win” profit to use, when and how to scale your profits etc.
That’s where a lot of real life brick and mortar businesses unfortunately go wrong but by following all the guidelines included in this course, that won’t be your case. You’ll be part of the 1% of the best managed businesses in the world.