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I'm interested in opening a new retail store and i need to obtain some form of funding. Are you guys familiar with SBA loans? Grants etc? investors? etc? As for the idea....i can't go into detail about it. But at the current moment there is only one store like it in the state and they are doing 45 million a year in sales. SO i plan to open something similar in my area. I need about 250K.....
there's numerous threads on this topic already ...
but to give you a "quick recap" ...
You need a lot more than an idea or even somebody else's "proven concept" (of which you may only know some superficial details and not their key insider operations which allow them to be successful ... if, in fact, they are successful).
You need to have some demonstrated expertise or knowledge of the business you propose, supported by a written business plan that sounds like more than "blue sky" upon which a lender can make a reasonable decision about fronting you money.
Most lenders will require that you have some "skin in the game"; ie, if the biz needs $250K to open it's doors, you likely need to invest 1/3 of it out of your own funds (not borrowed money from somebody else).
You need to have sufficient assets to repay a "loan" in a timely manner independently of the profits you project flowing out of the gross cash flow coming into your cash register. IOW, if you have nothing but "blue sky" and no other assets to secure a loan, most lenders have little to recover their investment if your business doesn't generate the profits or survive.
In addition to being able to repay the loan, you need to demonstrate sufficient personal resources to cover your own costs of living for a reasonable length of time independently of your projected income from the business. IOW, the money you borrow needs to fund the business, not your compensation for your time/effort/energy.
You can get an excellent idea of what conventional lenders require by simply going down to one ... such as your bank ... and applying for a line of credit/loan to open your business. Otherwise, you're seeking an "angel" investor, who may be convinced that you have the greatest biz plan since sliced bread ... and is willing to take on your risk; good luck with that. They exist, but how you can connect with one and raise funds is an entirely new problem. Of those that take on the risk, you'll find that their compensation may be far in excess of what you expect ... like substantial ownership of the company and taking the lion's share of the cash flow profits.
SBA loans are usually approached in tiers, starting at a much lower amount than you apparently need. Think in terms of a $25,000 note maximum for a first level. These are generally funded for an existing business that has a demonstrated presence, ability, and operations. IF you have nothing more than an "idea" without any proof of your own existing operations/product inventory/assets, combined with your personal cash flow/assets of minimal levels ... you don't have much to approach the SBA to secure their funding guarantee and investment source.
The bottom line to obtaining funding is you need to have demonstrated some ability in the business model/activity you propose, some personal financial ability, some reasonable "skin in the game" investment of your own, and a business plan that can make sense to an investor. What you'll have a hard time doing with any funding source is simply asking for a bunch of money to go play around with in such a manner that if your business idea doesn't work out ... you get to walk away from any responsibility for having had the opportunity.
So, are you ready/willing/able to really go into this business you propose?
Chances for getting a loan for start-up are just about zero. You can get the money from savings. You can mortgage your house.
If you make enough income and a high enough credit score, you might be able to get a signature loan.
Sometimes the seller of a business will carry paper, although that isn't an option for you because you want to start a new business.
Who knows, maybe you can find someone with more money than sense and talk them into buying into your business as a partner, or maybe giving you a private loan. Private money tends to be quite expensive.
Also, many of the places that sell you inventory will carry the cost of the inventory for a month or so.
Last edited by oregonwoodsmoke; 12-17-2016 at 01:12 PM..
there's numerous threads on this topic already ...
but to give you a "quick recap" ...
You need a lot more than an idea or even somebody else's "proven concept" (of which you may only know some superficial details and not their key insider operations which allow them to be successful ... if, in fact, they are successful).
You need to have some demonstrated expertise or knowledge of the business you propose, supported by a written business plan that sounds like more than "blue sky" upon which a lender can make a reasonable decision about fronting you money.
Most lenders will require that you have some "skin in the game"; ie, if the biz needs $250K to open it's doors, you likely need to invest 1/3 of it out of your own funds (not borrowed money from somebody else).
You need to have sufficient assets to repay a "loan" in a timely manner independently of the profits you project flowing out of the gross cash flow coming into your cash register. IOW, if you have nothing but "blue sky" and no other assets to secure a loan, most lenders have little to recover their investment if your business doesn't generate the profits or survive.
In addition to being able to repay the loan, you need to demonstrate sufficient personal resources to cover your own costs of living for a reasonable length of time independently of your projected income from the business. IOW, the money you borrow needs to fund the business, not your compensation for your time/effort/energy.
You can get an excellent idea of what conventional lenders require by simply going down to one ... such as your bank ... and applying for a line of credit/loan to open your business. Otherwise, you're seeking an "angel" investor, who may be convinced that you have the greatest biz plan since sliced bread ... and is willing to take on your risk; good luck with that. They exist, but how you can connect with one and raise funds is an entirely new problem. Of those that take on the risk, you'll find that their compensation may be far in excess of what you expect ... like substantial ownership of the company and taking the lion's share of the cash flow profits.
SBA loans are usually approached in tiers, starting at a much lower amount than you apparently need. Think in terms of a $25,000 note maximum for a first level. These are generally funded for an existing business that has a demonstrated presence, ability, and operations. IF you have nothing more than an "idea" without any proof of your own existing operations/product inventory/assets, combined with your personal cash flow/assets of minimal levels ... you don't have much to approach the SBA to secure their funding guarantee and investment source.
The bottom line to obtaining funding is you need to have demonstrated some ability in the business model/activity you propose, some personal financial ability, some reasonable "skin in the game" investment of your own, and a business plan that can make sense to an investor. What you'll have a hard time doing with any funding source is simply asking for a bunch of money to go play around with in such a manner that if your business idea doesn't work out ... you get to walk away from any responsibility for having had the opportunity.
So, are you ready/willing/able to really go into this business you propose?
Thank you I appreacaite the tough love i need it.
To Answer your question yes i am ready to go into this business!
I have been saving for a while, if i need to get to 80,000 in savings for my skin in the game i will make it happen! I have a great job. I'm a engineer.
I am in the process of also starting a shopify website to start selling some of the items....after this has been going 6-12 months if it's successful would that mean something to the banks, or would it have to be retail experience?
I am in the process of also starting a shopify website to start selling some of the items....after this has been going 6-12 months if it's successful would that mean something to the banks, or would it have to be retail experience?
OK, sounds like you have:
1) experience in the product line
2) resources to dedicate to put at risk
3) income to sustain yourself while the biz gets established/gets positive cash flow
4) an initial online biz in the making to establish proof of concept/products/market presence
What you're then proposing is to open a "brick and mortar" retail outlet from that base.
You'll need:
1) location/lease/security & damage deposits
2) business insurance for premises/products (liability exposure)
3) site utilities/communications services, deposits to obtain your commercial service
4) business licenses, permits as needed
5) sales tax
6) and the really big hurdle: employees to support the projected sales volume/units of goods
There's the rub ... once you get into employees, now you're looking at all the applicable
1) Wages or commission pay programs
2) Benefits
3) UI, Workman's Comp, employer FICA contributions. You may have to make substantial initial deposits to establish your account prospective liability in the view of the agency exposure to claims based upon wages/job classifications. This may add up to a lot of your dollars being tied up in an agency's hands without you ever having a claim against your employer account.
4) tax withholding, accounting, sales tax/property tax/inventory tax, tax reporting and remitting
(never forget that any portion of your operations generating a tax event for the local/state/federal agencies is ... from the moment of the event creating the taxation ... THEIR MONEY, not yours. Many agencies will aggressively pursue collecting their money and have the power to shut you down if you don't pay up in a timely manner, especially sales taxes or employer "contributions" for UI/WC, etc)
5) physical plant expenses, furniture, furnishings, marketing, printing, equipment, display racks/gondolas, warehouse racks, inventory bulk handling equipment, appropriate storage (temp? humidity?)
6) business security and premises/inventory control security. Burglar alarm? Fire alarm?
Get hooked up with a competent small business experienced accountant early on. You'll be glad you did. Let them do what they do best for your biz while you concentrate your resources upon the biz of the biz.
As well, if there's any likely exposure to legal concerns in your business, get hooked up with an attorney familiar with this business. A small biz attorney on your side can navigate through leases, provider contracts, supplier relationships ... etc. This is an area which deserves your attention to detail; a competent attorney knows when to be of service and when you are able to operate independently. You need to be discerning as to when you're getting value for your money vs counsel that you don't need to spend money on.
Know in advance that you will be exposed to giving a "personal guaranty" to suppliers who open lines of credit for your business in the early years. That means you will pledge your assets to secure the line of credit (yes, business owners have lost their houses when the bill came due and the biz didn't have the cash flow to pay up). You have to balance the advantages of leveraging product to sell on hand against the costs of buying it outright, FOB shipped to your doorstep.
It will certainly be to your credit and advantage to have a "track record" of performance in the biz when you take your business plan to a lender. With your "skin in the game", you've got your ducks in a row to pursue a favorable outcome ... especially if you can demonstrate a ROI and potential for positive cash flow. Having the rest of the picture ... biz support folks, supplier relationships, indications of a responsible & knowledgeable biz operator ... all is part of the picture you propose to a lender. The more complete the picture, the safer the projection of risk to the lender presents.
I'm interested in opening a new retail store and i need to obtain some form of funding. Are you guys familiar with SBA loans? Grants etc? investors? etc? As for the idea....i can't go into detail about it. But at the current moment there is only one store like it in the state and they are doing 45 million a year in sales. SO i plan to open something similar in my area. I need about 250K.....
Unless you have family or friends willing to give you the money, you must have collateral to back the loan.
They don't give out small business loans unless you can make the bank whole again if you go belly up.
You might be able to find an investor, but be prepared to basically give your business to them.
I would start online if possible, build up the funds and then open with your own money.
Once you prove that the business is successful, more doors will open up.
Unless you have family or friends willing to give you the money, you must have collateral to back the loan.
They don't give out small business loans unless you can make the bank whole again if you go belly up.
You might be able to find an investor, but be prepared to basically give your business to them.
I would start online if possible, build up the funds and then open with your own money.
Once you prove that the business is successful, more doors will open up.
SO far that seems like my best plan of attack............
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