Creating A Real HYIP - Set Your Basic Concepts

This is Part Three from the series of articles about creating a real HYIP. In the previous articles I wrote about the history of the HYIPs so far and the few attempts to create a real investment program. We also discussed why there are so many scams and why most people don't believe creating a real HYIP is possible. If you have not read those articles, please do that before to proceed:
- The HYIP Business - Is It Really A Hopeless Situation?
- The Real HYIP Can Exist

Now it's time to take some action.Creating an investment program is a business like any other. You must have an idea what you are going to offer, how much you will have to invest yourself, how will you achieve a good quality of your service and more. Let's actually go thru these items in details:

What is your vision?
What will be your program based at? Are you just going to create yet another HYIP pool or you want to invest the money of your customers in the real financial markets? Are you going to trade yourself or are you going to hire traders? Or maybe you will invest in some real offline business?
What is your vision. This is the most important question you need to answer. Take a sheet of paper or open a text file and write your ideas. For now just write and save them. Later in these series of articles we will go thru several of the best possible options and then you will be able to choose one and actually set your vision and concept. You should not start a program without having your vision written down.

Calculate your initial investment
Depending on your vision you will have to make some initial spends. For example if your program will be based on real estate investing, you need to make at least the first down payment for the first property yourself. If you are going to create a club based on a managed trading account, you need to invest at least the minimum yourself and open the first account. Then add the expected costs for setting up a website, the costs for buying a software which will do the tracking of the member funds, the costs for advertising of your program and for setting up an offshore company if you have not done that yet.

How Are You Going To Satisfy Your Customers
Many HYIPs fail because they are "one man show" and just can't manage with everything. What's your plan? Do you want to create a business which will make you rich or you want to create yet another JOB for yourself? A job that will make your nights sleepless and will consume all your free time? Or a business that can run without your constant presense? I guess you want to create a business. Then don't do it all yourself!.
You will have to plan outsourcing the customer relations, the accounting, the payment processing and the website maintenaince. Do not get upset, this does not mean that you need a real company with staff and office. Certainly one day when you business grows you can set a company with tens of employees, but let's think smaller for now. You can outsource all the tasks by using various services online. You can get everything for cheap and even better - for lower than your own current salary. So if you currently have a job, you don't need to leave it.
Now it's time to try to estimate some of these expenses and write them down. At the end of these series we'll make some sample calculations about everything.

How are you going to redistribute the profits?
I hope you understand you don't need to plan a fixed ROI. However, at the time of creating your business plan, you need to plan your own rewards. There are two main models which are used in high yield investing business:

1. Fixed total return
You can decide to pay out your investors all the profits which your club generates until they reach some fixed total return. For example some programs pay variable ROI until the investor get 275% or 300% total. Then, by the agreement, the investment expires and the member does not get anymore payments unless they invest again.
This method is quite rewarding for the HYIP owner. You won't take any cut of your investors profits, but once you pay them the total promissed ROI their principal starts working for you and you have no more obligations. You can take it out of trade and buy a house or just leave it to make profits for you.
Unfortunately this model have several disadvantages. First the investors don't like these programs too much, because they prefer to be able to compound and have their funds work forever. Second, it is hard to determine from the beginning what exactly to be that total ROI since in the real business you don't know what exactly will be the profits. And third, this means you'll have to wait long time before you start seeing the first results of your hard work.

2. Take a cut from the profits
This is the method I like more and it is very simple. You just get part of the profits for you. This can be somewhere between 10% - 50%. In my opinion you can set 25% cut without annoying your customers. Finally you have created and are managing the wealth machine for them so you deserve to be paid well.In this model if there is no profit or there is a loss in a given month, you just take nothing.

Decide on the payment cycle
Are you going to pay profits daily, weekly, monthly, quarterly or yearly? This depends on your business model. If you invest in real estate or an offline business it may take several months to get the profits from a project. If you invest in Forex, you can eventually calculate the profits weekly.
In my opinion you should never go for anything more frequent than monthly, because processing withdrawals and calculations will be too much pain. On the other hand, if paying once per year you will probably get no investors at all. So monthly or qarterly seems to be the best option.

Public or Private
This is not so important because you can always switch from one to another. Since the HYIPs are considered a gray area of business (even your real and honest one) it is probably better to keep a low profile and create the program private (and offshore!).Once you have your basic concepts set, you can think ahead of setting your killer-business. We are getting close to the most important part - generating profits.