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You should try your local bank and see if they will give you a loan but a lot of them don't give loans to businesses under 2 years old.

Another way to go is to look into small business loans.
More info at: http://www.sba.gov/financing
Depending on the state you live in, they may have some programs too.

-Nathan
 

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Discussion Starter · #3 ·
nwingate said:
You should try your local bank and see if they will give you a loan but a lot of them don't give loans to businesses under 2 years old.

Another way to go is to look into small business loans.
More info at: http://www.sba.gov/financing
Depending on the state you live in, they may have some programs too.

-Nathan
SBA only finances if a conventional bank has turned you down. Thanks.

Think it would be a good idea to start the company now and just sit on it for a few years? :)
 

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Love money (ie, loans from relatives) seems to be the most common form of early financing. When I was doing the homework before starting the business, I talked to a number of my acquaintances who are successful businesspeople to see what they did to get started, and every one of them said that the borrowed the money from their parents, grandparents, other relatives, and occasionally, friends. Later, they were able to tap into the more formal methods of financing. Even with love money, a good business plan, a clear loan agreement, and a process of regular reporting makes for "relatively" smooth fund-raising. In my own case, it was a combination of personal investment, love money, and a sympathetic banker. Of course, to make the banker sympathetic took a very good business plan, and a personal track record in other fields.

Keep in mind, however, that with love money, you really can't use bankruptcy to bail yourself out of a bad situation. When it's family, a different dynamic plays itself out. At least one of my acquaintances forgot that and ended up with no business, and no family. In my book, that's an awfully steep price to pay. :(
 

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pgriz said:
Seems to have worked for Nicole Smith.

It would be a little more difficult for a 30 year old male flooring salesman from Alaska, to do what Anna did.
Then again, I never tried.
 

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Florcraft said:
It would be a little more difficult for a 30 year old male flooring salesman from Alaska, to do what Anna did.
Then again, I never tried.
Ah, well for those that are truly ambitious, there's always modern plastic surgery (I hesitate to call it medicine). A snip here, a little extra there, some silicone, some botox, and voila, a new person! Male to female, or vise versa. Assuming one survives all that, then one has to locate an old fart with a weak ticker. You're right. Seems way too much trouble for a few million dollars. Almost makes you think that woking hard for your money is actually the easy way!
 

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Grumpy said:
I'd rather be poor than sleep with an old man for money. C'mon! <cringes>


Same here <cringes>

But if you happen to know any extremely rich elderly single women out there..............

Knowing my luck, I would still get turned down :)
 

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Florcraft said:
Same here <cringes>
OK, so that we now all agree this is not our preferred way of raising capital, let's move on.

The capital to be raised should cover both the budgetted expenditures and the contingencies. Too many startups have enough capital to just cover their basic startup costs, and get into serious cash-flow problems as soon as things don't go according to plan, which is what happens in real life. In fact, the cash-flow projection is probably much more important than the overall P&L account. What's the point of having a 50% profit margin, if you don't get paid for 120 days?

In my own case, we went through some very tough times when the cash out went ahead of schedule and cash in was behind. The dot.coms tried that with investor's capital, and most crashed and burned. We managed to stay afloat, but it taught me a very hard lesson about financial management, cash flow, acceptable trade terms, and that sometimes it's better NOT to make a sale if it is not going to be paid in a reasonable amount of time.

Another important point, is if it's your business, you better also have at least a 6-month reserve to cover your family's living expenses, as you may not be able to pay yourself immediately. A related matter is whether your significant other is comfortable with your plans to be self-employed. You may have the ability to confront the concerns and risks of enterpreneurship, but is your family as ready? If they are not, you are going to have to deal with a battle on two fronts - in business, and at home.
 

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Discussion Starter · #12 ·
My business plan and projected expenses include all costs forecasted for 3 months.

I was thinking of taking on a part time night job as a bartender. I can make just about any kind of drink :) But it will give me a money buffer and allow me to network with many people on a regular basis.

Every day my boss pisses me off, is a day closer to starting up my own company because when he pisses me off I come home and work on my research.
 

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Grumpy said:
My business plan and projected expenses include all costs forecasted for 3 months.

I was thinking of taking on a part time night job as a bartender. I can make just about any kind of drink :) But it will give me a money buffer and allow me to network with many people on a regular basis.

Every day my boss pisses me off, is a day closer to starting up my own company because when he pisses me off I come home and work on my research.
There are probably three things even more important than capital.

You can't survive long without having good people working with you. That why most venture capital firms first look at the management team of the company they consider investing in. In my own case, finding capital is no longer the most important obstacle to growth, it is finding good people who share the company values, complement existing skills and compensate for current weaknesses. Each time we find an individual who is a good fit, we are able to increase our growth rate. If you want to run your own business, it's never too early to be on the outlook for potential partners.

The second is to find a balance between work and your other life. I used to be one of those who burned his candle at both ends, was the first in to work, was the last to go home. I'm somewhat surprised that my co-workers didn't bump me off! However, if you start a family, then work is no longer the most important thing. For starters, a colicky baby keeps both parents awake, and you don't have the same energy level the day after. And these things sometimes take weeks if not months. As kids grow up, they need us to be there, to read them stories, to listen to their plays, and, just to be there with them. Then as they get older, there's constant commuting to music, sports practice and competitions, visits to friends, and family functions. As they become teenagers, there are other dynamics that take central stage, as in "little kids, little problems, big kids, big problems". Then at a certain stage, the parents (assuming they are still alive) start needing help and assistance. Some ship them off to a nursing home, but others start giving back to their parents the caring and love they got as children.

It's said that behind every successful man is a very capable woman. Do not underestimate how tough running your own business can be. A supportive, sympathetic and helpful spouse can be the difference between sinking under all the pressure and being able to keep an even keel and pull through. If you are fortunate to have such a partner, then you have increased your chances of success considerably.

It's kind of funny that what gets taught in the MBA programs is all about systems, finances, methodologies, human resources, sales and marketing techniques, but very little about the things that can break you down so easily.
 

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Discussion Starter · #14 · (Edited)
I agree with most everything you said. At first I would be using subs and I alrady have my crews picked out because I have known these guys for years and we've even used them a few times at my current job. I would definetly hire a vire compitent office manager to take care of my short comings. As the company grew my next hire would be a production assistant.

I also agree with what you said about a family, which is why I want to start a business before I start a family. I'd like to know that I don't have to work 17 hour days to keep the business alive before I decide to make a bundle of joy. Also my parents my getting old and I agree with taking care of them. Since I am the most responsible of my brothers I will get *stuck* with them. This is another consideration of mine ofcoarse. If I don't do this within the next 5 years I may not be able to do it for 30 more years! In 30 years I will want to retire. (26 now)


Pgriz I thank you for all your input. I had run an internet business from 98-2003, it was somewhat successful as a part time thing. I had customers world wide and worked 18 hours a day when you count my fulltime and part time jobs. I got to the point that I had to quit one or the other and I decided to stick with the home improvements since I saw, and still see, more future (and cash) in it. Some of what we are discussing is repetitive but that's good because anyone who reads this post at a later date will have a basic blueprint of forming a start up!
 

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Grumpy said:
What would the best method of startup/venture capital be? Should I contact local banks? Of coarse I have my own funds on hand but I want to do things right instead of suffering for a few years.
The answers to that question hinge on how much money are we talking?

Getting $10,000 is quite different then getting $100,000 and very different from getting $10,000,000. There are methods and resources that work best with the money involved.

For under $10,000 I would talk to family and friends, employers.

For somebody looking for $10,000 - 30,000 I would recommend using credit lines readily available, such as credit cards. Borrowing from 401ks ect...

For around 50,000 - 150,000 I would look at interest only home equity lines of credit, 401ks, banks

150,000 - 500,000 - look for partners, private investors or have good credit and equity to put up.

500,000 and up it is time to private investors and venture capitalists firms.
 

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Discussion Starter · #16 ·
Mike Great advice. Too much is happening at once. I have decided to build my company one two forms of capital... Savings for initial equipment and revenue for growth. Wow! Did I say revenue? Yep! I am not going to repeat the mistakes of the dot comer's. Initial equipment: truck, ladder and basic tools. I will do some repairs and maintenance which my boss doesn't want to touch, for some odd reason. We will not be in compitition. After I build a revenue stream and customer base I will quit my job and go for the gold.

The only reason I haven't already quit is I feel a stroange loyalty to my employer. He has never done me any wrong and I don't want to burn this bridge. I respect him and consider him to be a friend. If I disliked the man I would have no problem jumping ship!
 

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It will be interesting to see how long you two can keep an amiable and working relationship. Unless he is quite an extraordinary man, eventually most employers get to a point where they feel they are being taken advantage of whether it is based on fact or just emotions, and the relationship inevitably sours to the point where both people end up not only parting company but really feeling like the other person did them wrong. Keep us posted.
 

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Grumpy, If your employer is the kind of guy that you describe, he will be proud to have been part of giving a budding young businessman a start.
I have been a mentor to a number of young people, most have become successful and a few very much so. My daughter is on her way and it is now my sons turn although I have to admit that I don't know very much about rock and roll bands. He seems to be doing quite well and plays in 3 states, I mostly just give him advice on how not to get screwed.
You just have to get in the game and be a player. How many ups and downs has Donald Trump or Ted Turner had? The key is not to get beaten into oblivion.
Most business is not that bad. I have never owned one that saw red ink other than my original investment which was recovered in just a few months. I started my remodeling business with a 0%, $10,000 credit card but I already owned a good portion of the major tools. Stay away from Citi!!!!! I am currently opening a storefront for window treatments to be run by my wife and also a yacht management company to be up and running in the fall. Once you get the bug, it's hard to quit.
 

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Discussion Starter · #19 ·
The problem is that I do 75% of the sales for his company and when I leave it's going to be a big hit. The other problem is that when I leave we are going to service the same areas and end up as compitition instead of colleagues. If I were moving 25+ miles away we wouldn't be servicing the same area. Oh well, it'll all work it's self out in the end.
 
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