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meme77
10-02-2012, 04:24 AM
I have been running my business online, part time, for over a year now. I recently started making plans to start a store in my area. I know it's just crazy for me to even think about starting a business in my situation. My husband is the only one working and we have 4 children. I have been out of work for a year now and finding a job doesn't look to promising right now. It has always been a dream of mine to own my own business. So while I've just been sitting here with nothing to do since I can't find a job, I started on my research to start up a business. I have started small business managment with Penn Foster. The biggest problem I am running into is the start up cost. I know there are loans out there but my credit is less them good, I have no job so that would be a strike against me too. I have been doing various things to raise the money for my business. Selling my items online on a local site is not doing to well, when I sell something I have to go meet the person somewhere and they don't always show. I have just started with ebay sales, hoping that will help. I was wondering if anyone else has any ideas to help me out in raising the funds for my business. Thank you so much ahead of time for your help.

nealrm
10-02-2012, 09:25 AM
First, I think it is a good idea to start your own business. You have an online version going now, I would work to expand that. Use some of the profits to advertise, to improve the site and to hold a larger inventory. If cash flow allows, try renting a booth at a local market. Keep your expansion to what your cash flow will support. Yes this will take some time, but the business that is developed will be stronger and able to withstand market force better.

I strongly advise NOT to get a loan. The upside is that you can start the now. The downside is that you put your home at risk, you don't get a chance to grow into the business so you tend to make more mistakes, any mistakes you make are made at a larger scale than if you grow naturally, any mistakes you make are amplified by having to make loan payment, stress over the loan will effect your family life, health, and business decisions, the loan payments will drain money that can be used to expand, since the business was unnaturally forced to full size there is not an evaluation period on the business model, no time to adjust your market focus or strategy, no time to prove out business processes, and finally you end up pay 2 to 3 times the expansion cost due to interest. DON'T GET A LOAN!!!!!!!!!!!!!!

vangogh
10-03-2012, 02:11 AM
I'm with Neal on starting your own business. My guess is you'll find most of us here think it's a good idea. You mention start up cost. What are the actual costs you have? What do you specifically need money for? There are often solutions to keep those costs down. They might not always be long term solutions, but there are some things you can probably get for free or in trade or at low cost to get you started and then after a time when you have more money you can buy into a longer term solution.

What do you sell? You mention selling through a local site and now through eBay. There might be other sites you can sell through as well. You can also set up your own site for free in several places. I wouldn't recommend that long term, but there are ways to set up a site for little or no cost that will get you going until you can afford something more. Selling online is likely going to have less start up costs than selling through a physical store so if money is the issue, it's probably best to stay online for the moment and work toward the store.

When it comes to raising money, I'm not as against a loan as Neal is, but I do agree with him on the risk and being careful. You certainly don't want to risk things like your home. Odds are a loan isn't your best bet here and I'd much sooner seek money in other ways. Do you know anyone with enough money to invest? If you can start generating revenue with the online sales you'll have a much easier time convincing people you know you're a worthwhile investment. You probably won't even need as much of an investment either if you're generating revenue online.

simplybusiness
10-08-2012, 10:32 AM
Online business has less much less overhead costs so in many ways, it is safer that an offline store. There is an upside - mixing online sales with meeting people in person does not often work. Hence, I would actually recommend you try to make a name for yourself online and avoid offline business for now. Once you have a very strong position on the Web and you have solid revenue flow, you can plan opening a local store.

You may want to research government and local financing programs for small and medium enterprises. You may find some good financing options, which are better than loans.

KristineS
10-08-2012, 12:01 PM
Do some research on grants. There may be grants for mothers who want to start their own business or women over a certain age who want to start a business. I'd also contact your local Small Business Administration office if there is one, and your local unemployment office. Either of those places may be able to direct you to additional resources.

phanio
10-08-2012, 02:03 PM
You are not going to get a business loan. You have to find other ways. Find any job (even minimum wage) and use those funds to start your company. Or, look to personal assets that have equity in them then find ways to tap that value. Those are your only options. No banks or lenders fund startup businesses - especailly those with bad credit, no income, no track record and no assets.

eJones215
10-29-2012, 11:14 PM
Why shouldn't he take out a loan? She should take the "by any means necessary" approach to start her business. Of course, meme77, you should do what you can to reduce your risk when borrowing money, but don't rule out anything that could get you further in your endeavors. Just be careful of the debt you take on and make sure your loan won't swallow you up if there's a hiccup in your plans. I would even suggest talking to a SCORE Rep in your area about an SBA loan. They may be able to work with you. In the meantime, do what you can to raise that credit score. You are an entrepreneur. The biggest tool you can have besides a large bank account is a solid credit score. Fix that, and you'll have a fighting chance.

vangogh
10-30-2012, 12:39 AM
I agree. I don't think you should automatically say no to a loan, though I do think you should be careful and lessen any risk if you can. In this case I'm not sure what the loan is needed for. Start up costs to set up an ecommerce site shouldn't be so high they require a bank loan. Even on the high end you're probably talking a few thousand dollars at most. That's not nothing, but it's less than what you'd usually look to a bank to get. If money is that tight you can get an ecommerce site up and running for a few hundred dollars.

fayt
10-30-2012, 08:15 AM
Starting your own business is the best thing that could happen to you. It can make you or break you, let's hope it makes you.

First of all there are many ways of getting money to finance your business.

#1. Depending on how much money you need, have a yard sale and sell a ton of items. (Low Funding)
#2. Find a business partner to invest half. (Medium Funding)
#3. Get a loan, go to a credit union, mine is a 7% interest which is great. You can qualify if you have collateral, also include your husbands monthly income. (High Funding)

A loan saved me, I had all my debt on credit cards and was paying 23.99% - 29.99% interest for 2 1/2 years, before getting approved for a 7% bank loan which transferred all the credit card debt to the bank.

Also, yes you might pay back 2 - 3 times the loan amount, however you'd never have had the business without it. It's a toss up of never having your own business compared to having one and paying a bit more money.

Make sure this business will be 100% successful and there is a market for it before opening. Perhaps explain your business in full detail so we can help you figure out if it's worth it.

nealrm
10-30-2012, 09:11 AM
She should take the "by any means necessary" approach to start her business. That is a very good way to go bankrupt and loss everything. It is extremely poor advice on starting or expanding a business.


Also, yes you might pay back 2 - 3 times the loan amount, however you'd never have had the business without it. It's a toss up of never having your own business compared to having one and paying a bit more money. This is not correct. We are talking about a business that is already running. If it can't cash flow the funds needs to do a minor expansion, then it should re-evaluate what it is doing or when it plans on doing it.

fayt
10-30-2012, 09:33 AM
Making the move from an internet business to a brick and mortar can triple your business or cost you everything. If you are selling products on Etsy or Ebay you probably are making very very little money. I've tried both, there was dozens of people selling the same things so I couldn't compete.

However if your product is unique to a city, something fresh and new, chances are it will be a big hit. My side business is making soap, it's in almost every single store around here, including all craft fairs, city markets, etc. However the first place I got mine in was a multi-million dollar ski resort, they bought 50 soaps and 28 lip balms right off the bat. Next place I went was a high traffic store in the biggest shopping center around, they purchased two dozen from me. Everyone loves the products. I can compete because I have a unique product. I started the business on about $150, and already sold over $1,000 worth. I first tried selling it online and hardly could get one sold a month.

So it really depends, it pays to do your research and market test first.

stalla
10-31-2012, 07:32 AM
According to me starting your own business is really good idea. Do not get any loans for your small business. There are many ways to start your business without any loans. First of all thing how many money you want, and still how many money you have. Start business in your range. Then find out your niche related network who are really interested in your business. Via shift your network looking for financial backers who can really useful to start your business. Also you may locate some best financing options, which are much better then loans.

fayt
11-02-2012, 08:02 AM
While loans are bad for start ups, it's a great idea for existing businesses. If a restaurant is doing $400,000 gross sales a year, it has $50,000 in inventory, and the owner is taking a salary of $80,000 a year, and the business is for sale at $100,000. In just over a year you can pay off your loan with little interest, even dragging it out for two years.

There is no guarantee that it will continue to make that much, because it depends on you and also your customers. Some customers have a great relationship with the owner and when they are gone, the customer is gone. Also how friendly you are and if you change the layout or theme of it.

But in the end, if you really really want to start a business and a loan is your only option, do it, but make it a low amount. Borrow say $3,000 and work on that. Just don't go crazy and take out a $50,000 loan.

figueras
11-02-2012, 12:53 PM
meme77,

Look to other industries like the crowfunding and alternative finance industry. You can find good deals there for your case there. If you are already in business, it will not be hard to find unsecured loans for a premium.

billbenson
11-02-2012, 03:10 PM
This is not correct. We are talking about a business that is already running. If it can't cash flow the funds needs to do a minor expansion, then it should re-evaluate what it is doing or when it plans on doing it.

Well its a big cash flow jump from running a business out of your house or apartment and a store front. Assuming she has the contacts and skills to be profitable out of her house, she should be able to determine the cash flow requirements of making it into a real business.

Not knowing if her back is against the wall (we don't know what her husband makes) makes it hard to give advice. When my career ended in 98 I fumbled around for a couple of years, blew all my savings, looked for work, and built a website around a product I had access to sell. Once I had the web business active, it wasn't long until I was making more than job offers I was getting. I was still living below my means, but it was the best option.

When your back is against a wall, you do what you have to do. A few weeks ago a man robbed a bank of one dollar. He figured a free meal and roof over his head was better than how he was living.

indycine
11-05-2014, 07:40 AM
I would say it depends entirely on the health of your business. If your business is so well-researched and realized, that its cash flow can service a debt, you should give a business loan serious consideration. Crowdfunding is viable, it just takes so much time to set it up and work it until it funds. Whatever the source, if you can keep that ball in the air, and your business can pay it down, then take out the loan. Many many businesses came before us, and lots of those were started with loans, maintained with loans until they were on their feet, and loans were used for expansion. Loans are not always a bad idea - have some gumption, people!

Yoav
11-06-2014, 05:52 AM
Many many businesses came before us, and lots of those were started with loans, maintained with loans until they were on their feet, and loans were used for expansion. Loans are not always a bad idea - have some gumption, people!

Taking a loan for your business is not necessarily a bad idea, but it usually is. Moreover, Today there are million ways to start your business with a very small investment and generate revenue in a matter of days. If you succeed, spent the moeny you earned of growth, starting the other way around is very very dangerous.

There are many business that tool loans and succeeded, but there are much (much) more and sunk and left there owners bankrupt.

smallbizfinancier
01-08-2015, 05:24 PM
Never take out a loan to start a business. Or so says Mark Cuban: https://www.youtube.com/watch?v=KYneLGRTgy8

Instead, start small and grow slowly and methodically; when you're at a stage when cash flow merits growth, leverage cheap capital and measure the results.

Grow when it's right, not when you feel desperate. An analogy: you're sitting at the craps table and you're trying to win back the money you've parted with and in turn you keep increasing your bet hoping that you'll cover more ground quicker. Bad idea.

Raven2014
01-08-2015, 05:46 PM
And even if they do, it will be a low amount. I applied for an SBA loan. My credit was excellent, but because I needed what they called a "start-up loan", they only offered me $5,000. I told them I did not want it, so then they offered me $12,500. They ended up loaned me $12,750. I am still paying on that and it was not enough to even think about getting my business up and running. Now I make payments every month on that loan. I have been paying $150 per month every since 2009 and will be until 2019, and the money was gone practically from when I first received it. I never had enough to buy the equipment I needed and bought used equipment which did not hold up and the companies I got the equipment from ignored me when I tried to get some help. A person needs at least $50,000 minimum to get started. I had $12,750 plus the $12,000 I had saved, but that was not enough. You have to figure all the overhead and expenses. Between my inventory, marketing, and everything else, I was broke in no time. It just takes a lot of money. Unless you have some way to make your loan payments in case your business does not take off right away, I would advise against borrowing unless you can get enough to tide you over until it takes off and does well on its own. The sad part about it is, the bank that I got my loan from told the it would build my credit even more.....ha, it goes into one credit bureau, Experian. I am not allowed to add it to the others. What a bummer!

smallbizfinancier
01-13-2015, 06:33 PM
Meme77: Sorry, but what exactly is your business?

Kyle Johnston
03-19-2015, 10:23 AM
The internet can be a great source of funding check out these options:

www. kickstarter. com is great for crowd funding campaigns. Usually this method involves using small amounts of money from large numbers of people. With kickstarter, you create a campaign with a time frame and amount you want to raise. People who like your campaign can pledge x-amount of money. If the campaign goal is met, all contributors are charged and if you fall short, nobody is charged. Kickstarter charges a 5% fee.

www. wefunder. com and www. onevest. com these sites use crowd funding geared towards start-ups and work similar to kickstarter. You will create a profile of-sorts for your idea and people can choose what to invest in.

www. gust. com - this site uses groups of angel investors and investment capital. Securing funding through this site is the hardest of the group, but it can provide the funding needed all at one time. This site works the same as others, create a profile, detailed description of your business, and let the investors decide.

Hope this helps!

Kyle Johnston
03-19-2015, 10:26 AM
This is just me but I would recommend staying away from credit card debt. It tends to run our quickly and the interest rates are ridiculous .

Fulcrum
03-19-2015, 05:26 PM
This is just me but I would recommend staying away from credit card debt. It tends to run our quickly and the interest rates are ridiculous .

I agree with this. Credit cards should only be used for short term funding and must be paid off before the due date.

listontradefinance
06-01-2015, 03:06 PM
I agree with this. Credit cards should only be used for short term funding and must be paid off before the due date.
I agree with you completely. Credit card is a kind of trick invented by banks) Try looking for corporate funding first of all, it will reduce the costs for you, and second, try finding funding which complies with your business activities. When the bank or non-bank lender lends you funds they prefer to know what is the purpose of funding (that helps them secure their loan), if the loan is specifically given for what it was meant for by a lender, than you'll have the best terms and rates. So don't play a 007 game with the lender - the more uneasy he feels about your targets, the more likely he'll reject you. For example, we work with importers who lack the cashflow for the deal, we will not approve the applicant until we know the full story of him - it helps us mitigate the risks significantly.