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Thread: Small Business Financing

  1. #1

    Lightbulb Small Business Financing

    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. )

  2. #2
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    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.

    Quote Originally Posted by jimmaio View Post
    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.

    Quote Originally Posted by jimmaio View Post
    (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.

    Quote Originally Posted by jimmaio View Post
    (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.

    Quote Originally Posted by jimmaio View Post
    (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.

    Quote Originally Posted by jimmaio View Post
    (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.

    Quote Originally Posted by jimmaio View Post
    (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.

  3. #3

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    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?

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    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.
    Brad Miedema
    Fulcrum Saw & Tool

  5. #5

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    Quote Originally Posted by Fulcrum View Post
    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

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    Quote Originally Posted by WaveRunnerFun View Post
    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).
    Brad Miedema
    Fulcrum Saw & Tool

  7. #7

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    Quote Originally Posted by Fulcrum View Post
    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?"

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    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.
    Brad Miedema
    Fulcrum Saw & Tool

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    thank you! I found some amazing ideas! a million thanks guys for this!

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    Quote Originally Posted by Fulcrum View Post
    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.
    I get start-ups to fortune 500 companies funded!

    http://BisFunding.com

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