New Plastic Card Business

[Marksalderson]

Hi there,

Me and a friend have recently (in the last few weeks) decided to go into buisness in the Plastic card printing area, ie loyalty cards, membership cards, ID etc etc. I work for a company as a field based engineer and my friend actually works for one of our soon to be (hopefully) competitors.

I've done alot of research into costs and such, like what machines we would need, our overheads and things. And know that for us to get anywhere with this we would need a business plan. So thats the next step along the road, to get a plan sorted, i've just got two question that have been really perplexing me:

1) We're both quiet young (22), no prior experience of running a business and have no capital behind us. I understand it's impossible to get finance if you're not willing to meet the bank some of the way. But i have been hearing about a Small Business Loan Garentee scheme (or words to that effect)

Does anyone have much experience with this scheme? is it normally reserved only for the business ideas that the bank KNOW they could make a killing from dispite the lack of funding? Or is it used more, how in my opinion it should be used, to offer those without the ability to assure protection for a loan a shot at running a business?

2) Market Research is really daunting, i know this is not the place to ask but i thought i'd just post one post and combine. As far as i can see, the only market research i could really do myself would be to find out the existing companys who offer the service that we would be offering, and how much they charge.

I'm no expert, but if a would be small fry competitor asked me how much of a market share i owned and how much money i made a year etc etc, i'd tell them to piss off! My question, finally is : Do most small businesses that are conducting their post-start market research hire a professional agent to do the leg work for you? If so, how much would we be talking as a rough guesstimate.


Thanks in advance all of you savvy know it alls!

Mark

[fastfences]

Hi Mark,

There's a MASSIVE start-up cost with your proposed business.

Have you considered that you'll need a high quality screen and/or litho printer, laminator, guillotine, blankers (for cutting cards from sheets), encoders (presuming you're going to input info to a mag strip) and personalisation embosser? Because of the security attached to this industry, you may be hard pressed to obtain the equipment even second hand.

Have you sourced supplies for paper, laminating film, mag tape etc? How are you going to 'weld' mag tape to film?

There are some big 'players' in the industry, as your 'friend' will know.

The best tip I can offer is to do a HEAP of research. You will need something extra special (and not just price) to be able to 'convert' clients from the giants like Oberthur etc.

Cheers, Nigel

[Marksalderson]

Hiya Nigel,

thanks for the feedback, we've estimated the cost to be around £50k, the machines we've been looking at are around £6'000 each, give or take. We wouldn't be making our own cards as the present average cost that our competitors sell their batches of finished cards for are high enough that we could cost effectivly import from the States at around 11 cents per card (mag strip included)

We have a few ideas up our sleeves, some which have had some nice feedback. The problem is, because we're still in the planning stage and are so far away from actually launching, we can't really talk about them too much.

I could talk about this loads, i'll have to open a post in the general forum though. it could get quite off topic! it seems you know where you're coming from though Nigel, it would be great to hear more from you.


Thanks,

Mark

[fastfences]

Aw, shucks, I'm just an all round knowledgable guy hidden behind a facade of fence builder.

Fact remains though, that sourcing finance (I believe) will be your biggest headache. This will develop into a 'catch 22' situation, because you will have a better shot at finance if your business plan will reflect 'guaranteed' sales. Can you get any family money? And, the big one - can you put your age up :lol:
Cheers, Nigel

[Kyotee Matt]

Hi, Mark

Not wishing to be a kill-joy, but have you considered that the company that your friend works for may have a clause in his/her contract that forbids them to enter into a competitive business while working for that company and for up to six months after leaving?

One of my ex-employers did - I only found out when I went to look for how much notice I needed to give! I'm just thankful that Kyotee was nowhere near anything that they did.

Hopefully it won't apply, but just be sure, after all, you don't want to leave your new company open to a legal wrangle with old employers.

Good luck with it, though!

[Marksalderson]

thats a massive point i hadn't even thought about. My previous place of work before my current had a clause like that. The trouble is we're going to be located in the same industrial estate as his employers! :shock: unless he stays silent when we start up for 6 months, maybe that would be a loophole.... he might not even have that clause, i'll have to check.

As for the Finance, you're right nigel. Unless we can prove this is a sure fire thing they're going to laugh at us, i'm working on a first draft rough Business plan as we speak which will be taken to Business Link to be looked at, see if we're barking at the wrong tree or anything.

I guess at the end of the day it's who dares wins Rodders

[Rob]

As regards you raising funds from the banks you are going to struggle. It's not so much your age/experience (although that does factor in), it's your lack of contribution. Asking the bank to put up 100% of the cost is a no-no. If it all goes wrong, what have you lost? Nothing, but the bank has lost the lot.

The SFLG scheme you mentioned is more for those businesses which have a proven business idea i.e. serviceability of bank debt is not a problem, but which lack security to provide the bank with extra comfort. that's where the nice PM Brown wades in with his guarantee.

Also you are just zeroing in on capital cost; in this line you are going to have a sizeable working capital requirement, that is you will have up front costs in the form of raw material and general overheads etc before you even begin to sell and wait for your clients to pay up.

Starting up with no cash in your back pocket is a receipe for disaster ... go look for someone with cash to partner up with and then sit down and work on your plan.

Good luck

[stugster]

Hi, this thread is almost 3 years old.

Please can you start a new thread if you want to raise any new topics? :)