Total Merchant Resources Before Shark Tank
Unforeseen accidents can cause a lot of damage to a small business, and sometimes banks are simply not willing to work with small businesses because there is no guarantee that they will receive any money back. Enter Total Merchant Resources, a New Jersey-based company that seeks to aid any business owners with extra cash-flow. Total Merchant Resources are a lot like the Sharks from Shark Tank, but operate on a much, much smaller scale. To find out how they’re the Mini Sharks, read on more…
Total Merchant Resources on Shark Tank
Entering the Shark Tank are two-self described “mini sharks.” They are Jason Reddish and Val Pinkhasov, and they are seeking $200,000 in exchange for 20% of their company. One of the most frequent causes of a failed business is being under-capitalised. However, with Total Merchant Resources, this can be remedied. The next entrepreneur that walks through the doors of Shark Tank needs money, but with the financial meltdown, it has been virtually impossible for businesses to get the money they need to survive; sort of similar to how Total Merchant Resources has come to Shark Tank seeking an investment and a partnership. Jason says that the two have merchants coming up to them daily, asking for help and resources. Total Merchant Resources provides alternative financing solutions, so any startup company can get the capital or resources they need quickly to reinvigorate the business. With the Sharks’ help, they want to create more jobs, help out small businesses, and grow up to eventually become big sharks.
Mark is the first to point out the irony, and the other four agree with him; these two corporations (counting Shark Tank as the opponent, regardless of the five Sharks) would essentially be competing with each other to make money. Kevin asks to talk about loans, but Mark asks if they are loans or underwriting – underwriting is the process that a lender or other financial service uses to assess the creditworthiness or risk of a potential customer. Jason says that the offers extended are not really loans.
Robert asks if they are taking equity, which the two from Total Merchant Resources say they are not seeking to control equity. Kevin gives the example of a dog groomer who is earning around $80,000 in sales, so to grow he wants another $20,000. The dog groomer couldn’t get that from a bank due to being too small of a business, so the dog groomer then goes to Total Merchant Resources. Val says if the person qualifies, they would receive the $20,000. Kevin asks about the terms of the loan, and Val says that they would be receiving back anywhere from $26 thousand to $28 thousand, depending on the risk of their business. The Sharks ask about the terms, to which the two from Total Merchant Resources say that there actually is no term – this draws one of Mark’s famous “are you serious” faces where he sits up right and opens his palms. To compensate for this, Total Merchant Resources takes a percentage of credit card sales until they are eventually paid back in full. Essentially, Total Merchant Resources takes over the credit card processing of whichever firm came seeking investment – this draws surprised reactions from all of the sharks.
Val continues on, to give an example – imagine a merchant batches $1,000 in a night. $800 will go to the merchant’s account, and $200 goes to Total Merchant Resources account. Mark says that the two of them are using the credit card processing to get a food in the door, and says that for example, he would need $50,000 to upgrade or improve a restaurant, then he goes and receives the loan and is all set up. Eventually, the two would seek to control the company’s credit card processing.
Robert goes on to ask about the background of the two, and Jason says that he has owned a decent-size mortgage company for the past 10 years. Val’s background is in mortgage sales where he ran sales, and about six years ago, Val interviewed at Jason’s office for a management position and was hired. Robert asks about sales, which Val then says were around $364 thousand total in 2012, and Total Merchant Resources took home about $220 thousand of that. The two seek to build a relationship with the Sharks that they can then use to move onto bigger and better credit card processors so they can open more accounts, since that is the only component of the business that requires the “who-do-you-know” portion. Robert asks where they would get the “float” – the extra cash. Once the credit card processing accounts are onboard through the Shark’s connections, those accounts will give off a very nice residual, which is minor amounts of cash that can constantly be accountable for coming in on time. Robert goes back to the example of the dog groomer who makes $80,000 a year and needs an extra $20,000 – there is no way that the dog grooming business could make enough money to pay back Total Merchant Resources in the allotted period of time. Val goes on to say that the company only started with $5,000, which has grown over time to be worth over $100,000. Lori says that she is still not sure about all of this, and folds out of the deal.
Jason gives an example – a tanning salon in Bayside, Queens, New York needs a new air conditioner (Daymond points out that he actually went to Bayside High School). The guy needs $18,000 to fix the air conditioning on the roof, so how long would it take a guy running a tanning salon to pool together the $18,000? Jason goes on to say that if he wasn’t there to help, the tanning salon would be out of business quickly. Robert says that there is an entire subset of small businesses which cannot get a loan, but it is not a market for him, and he folds out of the deal as well.
Mark introduces the biggest risk to this company; the government. There presently are not limitations, but a situation like payday loans can be seen – payday loans became so popular that the government had to step in and provide regulations so as to protect the consumers. Val gives an example of some testimonials of some customers that are so happy they cry, but Mark says that he understands that it is nice to see people go to Total Merchant Resources instead of the bank because at least the two will care and work with the people. However, Mark says that he is still worried, due to the old adage “when something goes wrong, go to the deepest pockets,” which Mark would be the deepest pockets for Total Merchant Resources. He is out.
The two ask about Daymond’s interest in the investment, to which Daymond instantly says that he is not interested in the deal either.
Kevin is the last shark remaining, and says that he thinks that what the two do is necessary, despite the other sharks not seeing the merit in such a model and that the sharks see it as an evil, but it is a necessary evil to keep some small companies in business. Kevin says that he is making the assumption that the two are smart enough to come onto Shark Tank and ask for a partner, but says that would not happen unless he owns 50% of Total Merchant Resources, making him the largest partner. For a 50% stake in the business, he offers a $200,000 investment and the promise that he can take Total Merchant Resources to a whole new level due to his access to some capital. Kevin says that he brings a tremendous amount of credibility, contacts, and resources to the company, and he would not be interested for anything less other than being the major partner of Total Merchant Resources. Mark pipes in, saying that distribution would get cut in half – each man would be making half as much as they are now, essentially. To drive his point home, Kevin asks what the two think the probability is that anyone would return his phone call, to which Jason replies “extremely high.” The two take a minute to think about the offer on the table amongst themselves, and when they return, Val says that the sales, the revenue have tremendous value as well. There are some barriers to entry, such as the ones Kevin mentioned, and offer a counter-offer of $250,000 for 25%, which Kevin instantly refuses. Kevin says that if he were to put his name on a business, the bottom line (the total profits for the year) would triple. He allows the two of them to walk out of the shark tank and stay small. The two attempt to haggle, trying to talk Kevin down to $240k for 25%, while the Sharks insist that they take the deal to work with Kevin. The Sharks suggest to flip a coin, and Mark offers up a quarter.
Kevin walks up to the two of them, quarter in hand, and says that they must provide a binary “yes” or “no” – do they want him to flip the coin right now and essentially decide their fate? Jason thinks for a moment, glances to Val, and then says “heads, you’re our partner, tails, you’re our partner” – the deal is closed regardless of the coin flip. Jason and Val found their ultimate investment for $200,000 in 50%, as well as finding an amazing business partner in Kevin O’Leary.
Total Merchant Resources Now in 2018- The After Shark Tank Update
I was unable to find any real concrete information about Total Merchant Resources, but the prime fact of the matter is that it is still open to this day. Actually, it is open from 9 AM to 6 PM every Monday through Friday, and is based out of New Jersey. I was unable to find how many businesses they might have helped or how many calls they receive in a day, but with Kevin O’Leary backing them, there is no doubt that Total Merchant Resources is doing well, and in doing well, doing a lot of good for small business owners and the community.