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jimmaio
08-19-2016, 03:55 PM
Hi,
I am writing a free small business guide to help new business owners with the financing process. Please help me gather some information. Any help would be great. Below are some examples of what I am looking for, but feel free to talk about things related to small business finance.

(1) What are some small business financing mistakes that you personally experienced?

(2) What online resources/websites provided information that really helped finance your business? What are some websites that did not help as much?
What are your thoughts on the SBA?

(3) What are some of the best ways to finance a business when loans are not an opinion? ( Ex. bad credit scores, recent startups, or poor revenue)
How did you overcome?

(3) What are some experiences with borrowing from friends? Did you use a promissory note? why or why not?

(4) What was your experiences with merchant cash advance?

(5) what are some specific advice for certain types of business ( Ex. restaurant, hair salon, bars, consulting, etc. )

Harold Mansfield
08-20-2016, 03:02 PM
My answers may not be typical because I don't personally believe the average start up gets money from traditional ways, and most people have to start small, bootstrapping themselves, and work up. There's also more respect and trust from investors when you've exhausted all of your own resources to accomplish something, rather than merely looking for someone else to take the financial risk.


Hi,
I am writing a free small business guide to help new business owners with the financing process. Please help me gather some information. Any help would be great. Below are some examples of what I am looking for, but feel free to talk about things related to small business finance.

(1) What are some small business financing mistakes that you personally experienced?
Thinking that i would get a loan just because I had a good idea. That's a big lie that has been perpetrated for a long time and it gives people a false sense of how things really work. Once I got a dose of reality it helped me tremendously. Instead of being crippled because I'd never considered any other way, I got creative and started learning how to do things on my own.


(2) What online resources/websites provided information that really helped finance your business? What are some websites that did not help as much?
What are your thoughts on the SBA?
The SBA is a great resource of information for start ups and existing businesses. More people should take advantage of it.


(3) What are some of the best ways to finance a business when loans are not an opinion? ( Ex. bad credit scores, recent startups, or poor revenue)
How did you overcome?
There are no best ways, it's going to be different for everyone depending on their situation. Self financing is the way most people end up doing it and I think more people should be realistic and plan on that being their only option.

If it was as easy as just having a good idea and getting money, everyone would be doing it. The fact that they don't is proof that it doesn't work that way. Most people fold when they get a dose of reality that it will be harder than they thought.


(3) What are some experiences with borrowing from friends? Did you use a promissory note? why or why not?

Depends. Most family and friends don't understand the risk, and are very unrealistic about what it takes to start and grow a business. So borrowing from people with unrealistic expectations, and who can't afford to lose the money is a disaster waiting to happen.

That's not to say that it couldn't work. It has and does all of the time. But again, unrealistic exceptions, and over promising result in horrible situations that can kill a business before it even has a shot, and ruin relationships for life.

Too many times I've seen family and friends panic, make rash decisions or demand things be run a certain way, while having no understanding or experience in what they were doing and it destroyed the business.


(4) What was your experiences with merchant cash advance?
I don't trust them, don't like them, and would never use one. It's the Payday Loan industry of business.


(5) what are some specific advice for certain types of business ( Ex. restaurant, hair salon, bars, consulting, etc. )
To broad of a question. Basically don't go into any business that you know nothing about, can't realistically compete in, and have no realistic plan of how you will get customers. "Word of mouth" is not a plan. It's hope.

Restaurants and bars specifically is where a lot of my experience is, and along with Web Design I wouldn't suggest that anyone without significant skills, and experience get into either of them. All 3 have been done to death, fail at record rates, and most people that get into them have unrealistic expectations of how hard they are, and how to compete in their market.

Running a bar or restaurant requires experience. It's not something you can just wing and learn as you go or you will lose your shirt.

Having worked for or watched first hand at least 10 bars, restaurants and nightclubs open, and fail..I'd still do it in a heartbeat, and still want to. But I don't walk around thinking "it's going to be great". I know it's going to be hard and that it takes money. Not just start up money to get the doors open, but operating money and a marketing plan.


The common thread in all of my answers is realism. Not the cookie cutter awesomeness that you are told about starting a business on TV. Starting your own business is stressful, hard work, expensive, and frustrating and everyone needs to have the real fear that you could, and more than likely should fail to avoid complacency and relying on hope.

It doesn't become great for a long time, but when it does it's worth it.

WaveRunnerFun
08-30-2016, 02:41 AM
very thorough response. I am in this situation as we speak. Start my business in 2013, had uncontrollable things happen it failed because I didn't have enough money, didn't play correctly and simly wasn't prepared. May of this year i re-opened my business through the proper channels.. This time I had more capital to work with... All of which i saved up, and assets i accumulated through my trade. Now i have been open almost 3 months and doing great! The problem is I need capital to get better equipment, upgrade my website, payment processing, marketing, etc the basics.. I currently use wix for my website creator and have out grown that...My business is seasonal here in Wisconsin, and i have produced a very nice sum of revenue in a short amount of time...

My question is... I am looking into lendingtree.com, lendio for financing.. I can't seem to find my 3rd party reviews or feedback. I don't trust what the websites have on their own domain. I've reached out to SBA office here where i live and there is nothing available that doesn't take into consideration my personal Credit score (610). All I have is the the progress I can show start to now, the revenue i produced using MY OWN MONEY (which wasn't much) Where do i go now for 30k that won't kill me or judge me on my bad credit?

Fulcrum
08-30-2016, 07:12 AM
Welcome Waverunner,

I see two main reasons why bankers run away screaming when you inquire about a loan (three if you include the fact you're a business).

1) Your credit score is 610
2) You have only been active since May.

Now, don't get too discouraged. Most companies have this problem as well. Banks like to pretend that they're open to small business lending, however, reality sets in as soon as you begin the application process.

Depending on your business you do have the following options:

1) Private loans
2) Factor your invoices if you can take the reduced cash flow
3) Used, semi wore out equipment that you can rebuild for a fraction of what new costs

Hope this gives you a few ideas.

WaveRunnerFun
08-31-2016, 09:40 AM
Welcome Waverunner,

I see two main reasons why bankers run away screaming when you inquire about a loan (three if you include the fact you're a business).

1) Your credit score is 610
2) You have only been active since May.

Now, don't get too discouraged. Most companies have this problem as well. Banks like to pretend that they're open to small business lending, however, reality sets in as soon as you begin the application process.

Depending on your business you do have the following options:

1) Private loans
2) Factor your invoices if you can take the reduced cash flow
3) Used, semi wore out equipment that you can rebuild for a fraction of what new costs

Hope this gives you a few ideas.
Yup, doing that as we speak. The equipment i use is used, the private loan thing i am already accessing. Its just about being patient and continuing to prove me worth. But it so hard waiting! haha

Fulcrum
08-31-2016, 05:25 PM
But it so hard waiting!

It is. Yet a great benefit of having to wait is that you are forced into deciding which purchase will have the biggest impact on the benefit (unless you have the same problems I do and end up having to replace the behind the scenes equipment rather than the front line machines).

WaveRunnerFun
09-03-2016, 10:41 PM
Welcome Waverunner,

I see two main reasons why bankers run away screaming when you inquire about a loan (three if you include the fact you're a business).

1) Your credit score is 610
2) You have only been active since May.

Now, don't get too discouraged. Most companies have this problem as well. Banks like to pretend that they're open to small business lending, however, reality sets in as soon as you begin the application process.

Depending on your business you do have the following options:

1) Private loans
2) Factor your invoices if you can take the reduced cash flow
3) Used, semi wore out equipment that you can rebuild for a fraction of what new costs

Hope this gives you a few ideas.


What do you mean by "factor my invoices if i can take reduced cash flow?"

Fulcrum
09-03-2016, 10:47 PM
I should have used the term receivables. You sell them to a 3rd party at a value less than what is truly owed. You get your money up front rather than waiting to get paid, but you will lose some of the value. You also need to sell good receivables and not suspect or poor paying ones (these will cost you more in the long run).

What business are you in? Maybe we can point you in better directions.

Hancerper
11-14-2016, 08:08 AM
thank you! I found some amazing ideas! a million thanks guys for this!

FinanceTotal
07-11-2017, 11:13 PM
Welcome Waverunner,

I see two main reasons why bankers run away screaming when you inquire about a loan (three if you include the fact you're a business).

1) Your credit score is 610
2) You have only been active since May.

Now, don't get too discouraged. Most companies have this problem as well. Banks like to pretend that they're open to small business lending, however, reality sets in as soon as you begin the application process.

Depending on your business you do have the following options:

1) Private loans
2) Factor your invoices if you can take the reduced cash flow
3) Used, semi wore out equipment that you can rebuild for a fraction of what new costs

Hope this gives you a few ideas.

This in a nutshell.

shrinkme
07-21-2017, 01:10 AM
I have borrowed in better and worse ways, mainly to get through a tough stretch. Luckily I am able to make up the difference fairly quickly. I have never borrowed from friends or family, other than very short term. Never took on equity financing either. Just loans. Hate to borrow money, but it's better than running out of cash.

Paul
09-05-2017, 12:48 PM
Thinking that i would get a loan just because I had a good idea. That's a big lie that has been perpetrated for a long time and it gives people a false sense of how things really work.

I couldn’t possibly agree more with all of Harold’s comments! So many inexperienced wanna be entrepreneurs have no idea of what they are doing. Many think there is a simple “formula” to raising capital and starting a business. Have an idea, write a boilerplate business plan and get money. There are already 100’s of relatively useless guides for raising capital.

Banks have absolutely NO INTEREST in startups! That is reality # 1. They are in the secured loan business, not the risk business. Real investors know how to assess risk and reward. They are typically not interested in meager returns with risk in common run of the mill businesses.

New entrepreneurs are at a great disadvantage primarily because they don’t know any real investors. There are many of them BUT if you can’t find them what good are they. They usually don’t even consider proposals from unknown people. It usually takes an introduction to even get a meeting. They often see hundreds of proposals a year and discard 99% of them. They often make an investment not only on the idea, but on the person running it. Without a track record of success chances are slim.

There are of course friends and relatives, but, as Harold mentioned, it is a very touchy situation. You can get lucky sometimes, but that is the exception to the rule.

KOMPAR
03-14-2018, 05:05 AM
Hey,

here are my answers to your questions :)

(1) What are some small business financing mistakes that you personally experienced?
Not focusing enough on the working capital side of things (i.e. not negotiating enough on the payment terms, which eventually got a lot of capital tied up in invoices).


(2) What online resources/websites provided information that really helped finance your business? What are some websites that did not help as much?
What are your thoughts on the SBA?

In Sweden I would say there is almiinvest.se, which is helpful for getting governmental funding.

(3) What are some of the best ways to finance a business when loans are not an opinion? ( Ex. bad credit scores, recent startups, or poor revenue)
How did you overcome?

Then I'd focus on getting paid by your customers upfront (credit card, Klarna, cash, etc.) and negotiating for payments through invoices with your suppliers, whilst keeping your inventory at an absolute minimum. That way you can get a negative working capital :)

(3) What are some experiences with borrowing from friends? Did you use a promissory note? why or why not?

I have avoided it, as it is way to risky for the relationships.

(4) What was your experiences with merchant cash advance?

Works well in my opinion.


(5) what are some specific advice for certain types of business ( Ex. restaurant, hair salon, bars, consulting, etc. )

Consumer facing businesses should focus on getting cash payments / credit card payments, whilst B2B businesses should negotiate for short payment terms with their clients.

Adolphus
11-02-2018, 09:05 PM
You sell them to a 3rd party at a value less than what is truly owed.

How do you find a 3rd party that will do that? does it matter if they receivable is small like 200 bucks?

Fulcrum
11-02-2018, 09:34 PM
Google search for "invoice factoring companies" should pull a few up. The size, and volume, of your invoices will affect what companies will deal with you. The big factors will have set minimum monthly volumes and minimum invoice amounts while smaller, more local, factors may deal with smaller companies generating lower volume lower dollar invoices.

capitalmerchant
12-11-2018, 10:29 AM
you can try my link in the signature we offer business loans even with a low credit score .

Willie Posey
02-18-2019, 06:38 AM
Hey Jin, If you have further details regarding section-3, then please let me know them. Actually, I manage some groups on social media and many a time newbies ask something related to this topic.

Chelsea
03-18-2019, 07:18 PM
(2) What online resources/websites provided information that really helped finance your business?

Attorney fees can be super expensive when creating startup documents, and I think this can lead to dropping a lot of money that could be used to continue developing your startup. Obviously there are times when an attorney is necessary, but with some startup documents there are online resources that are super fast, simple, and inexpensive. I really like SmackDocs.com. It produces high quality documents online instead of having to have an attorney write them up for you.

EmilioSen
01-21-2021, 10:38 AM
I know this an old post but never borrow from friends. if they give u money it should be as a gift and they should kiss that money goodbye. same with family. many lessons learned!

CapitalBoost
12-22-2022, 04:07 AM
There are several types of business loans available to small and medium-sized businesses like floral businesses. These include:


Term loans: These are traditional loans that involve borrowing a specific amount of money and repaying it with interest over a predetermined period of time.
Lines of credit: This type of loan allows a business to borrow money up to a certain limit, which can be used as needed and repaid over time.
Invoice financing: This type of loan allows a business to borrow money based on the value of outstanding invoices.
Equipment financing (https://capitalboost.com.au/product/equipment-finance): This type of loan is used to purchase new equipment or machinery for a business.
Working capital loans: These loans are used to finance the day-to-day operations of a business, such as payroll and inventory costs.
Merchant cash advances: This type of loan involves borrowing money based on future credit card sales.