Finance Help!

[Jason_Lee]

Hi all.

I have recently set up a website business. I need an investment to progress the business further. My aim is to have a turnover of £150,000 by the end of this year with £40,000 of that profit.

Please can someone tell me the best way to get finance. I am willing to pay a very nice interest on the loan, or i would also be willing to sell a percentage of my business for this investment.

I need £15,000 minimum, £30,000 would be prefereable as there would be a huger profit with this investment, however £15,000 would be adequate to get started.

Please help.

[bwglaw]

Sources of funding very much depends on the sector you are in, or going to be in.

Are you set up as a Limited Company? This will appear more attractive to the investor so you can issue shares in return. I am speaking from experience as an investor, although I know all investors are different.

Can I ask what the venture is and what would be your investment? You can email me direct at jonathan@handsongroup.co.uk if you wish.

[Jason_Lee]

I work in marketing but before that i had a job at 'Limeys' which sells high end designer clothing and accessories. I loved this job because of the discount on the clothing and have kept it on part time. The clothing from here is very expensive.

I have used the contacts they have to source clothes for my own business which i want to set up. I have the money to set up a website. The investment would be for stock and catalogue production because i am making this a mail order company.

I have researched this area and have alot of contacts. Working in marketing, i have advertised alot of clothing businesses in my time and also working in the retail industry for a few years i know the process. I do not have a finished business plan but the mark-up on stock will be 55%. This is a very good area to get into as internet shopping is on the increase.

Please advice on where i should go from here. I have read a few posts on here about selling clothing but there is a very good market.

Look forward to your comments.

[bwglaw]

You didnt answer the most crucial question:

what would be your investment?

£15,000 is quite a lot for stock, especially if it is a mail order.

Will you be getting stock from overseas? if so, have you researched into the importation, including any taxation.

Have you researched into getting a Mail Order Licence?

[Jason_Lee]

The investment i am looking for will go on stock, advertising and aditional equipment ( camera, lighting, manequins etc ). I can get this started for £15k investment.

The stock comes from the UK. I have not looked into a mail order license. I want to establish myself first as a successful retail website and then progress to mail order.

What are your thoughts? All help would be much appreciated!

[bwglaw]

As I have posed so many questions I won't pose any more but a serious investor is going to be asking more questions and will no doubt want sight of a business plan showing how you have planned the business, how you anticipate the £150k turnover (which is very generous in 1st year trading).

You should not be afraid to admit that your turnover will be, say £50k for the first year. An Investor will be looking for realistic projections otherwise they will be put off in the long-term.

You said that you would be setting it up as a mail order company and then just said you are looking to set up a retail website. If you are accepting orders over the internet and despatching the product you are effectively a mail order company, so a licence will be required.

You have reiterated what the investment will go on i.e. stock, advertising, equipment etc (not sure why you need the equipment you mention i.e. camera, lighting, etc)

I asked you directly what will YOU be investing if an investor invests £15,000. No investor will support a venture 100% in capital funds because he/she will be setting up the business themselves!

If I invested £15k what return would you give me? By this I mean what % share of the Ltd Company would you give me for £15k - assuming it will be formed as a Ltd Company.

To be honest, I would not seriously be interested in investing in a clothing/mail order businesses because it is not my sector but as an experienced investor I asked you the questions to put you through the paces of what another potential investor may ask.

As soon as you have a thoroughly thought out business plan, questions predicted/answered and you are sure of your venture and come up with the information from the back of your hand then you are in a position to approach investors. You will need to convince the investor or any lending institution what is unique about your venture/market and show it is not 'just another mail order company' that will be profitable because that is what all entreprenuers say, and many fail.

I wish you luck in your venture

[Ian J]

Have you researched into getting a Mail Order Licence?

What's a "mail order licence". I tried Googling and came up with nothing.

[Jason_Lee]

Thanks alot Johnathan you have been very helpful!

[bwglaw]

What's a "mail order licence". I tried Googling and came up with nothing.

Whilst I don't specialise in consumer/licencing law I understood that a licence was required for 'mail orders' especially when selling goods through a catalogue. This may well have changed by the Distance Selling Regulations so to include the Internet. In any event it is worth seeking advice from the OFT.

The following links may be useful also:

Shopping from home - your rights (http://www.oft.gov.uk/consumer/your+rights+when+shopping+from+home/shopping+from+home+help.htm)

Distance selling and ecommerce (http://www.dti.gov.uk/ccp/topics1/ecomm.htm)