Advice on a new startup idea, funding & guidance

Discussion in 'First Steps To Starting A Business' started by Keep It Spicy, Jul 23, 2018.

  1. Keep It Spicy

    Keep It Spicy UKBF Newcomer Free Member

    14 1
    Hi,


    I'm hoping some of you can help point me in the right direction RE startup grants for a new business, as I seem to have hit a bit of a brick wall RE funding.

    The wife and I want to bring to market a range of speciality seasonings (dry rubs & marinades) but we have struggled to find advice or availability on startup grants specific to what we want to do.

    We’re completely stumped on where to find start-up grants or even advice. So far, all that seems to be available are grants for software/technology/app startups (Ironic really as I have been software developer for 20+ yrs, the last 5 spent in ecommerce and app development) or those that can provide services to a gov body or create/secure jobs.

    I’m sure some of you are thinking.. “Why not take out a loan”.

    1) We’ve not ruled it out.. But quotes from major high street lenders are jaw dropping.

    2) I also think the return from a grant far exceeds finance. Most grants I've researched (that were not eligible for) also come with business mentoring and guidance, company visibility and promotion.

    We’re at the stage where it’s just funding stopping us from progressing.
    We have a business plan & forecasts etc.
    We’ve developed the range of products & market tested (including blind taste tests against leading market brands in which we smashed it).
    Secured some small prospective orders from regional artisan speciality food and beer shops.
    But we’ve don’t have enough funds to self-start.

    We did start the application for an unsecured loan via Funding circle, but we were told that we’d have to find personal guarantors to cover the loan… which confuses me somewhat.. As that doesn't seem to fit the description ‘unsecured’.

    Also spent a month-long game of email ping pong with a really nice guy from CrowdCube, who was really helpful looking at our pitch & financials etc.. but sadly.. was advised to get trading and come back in 18 months.

    All help, guidance, advice and direction pointing welcome.
     
    Posted: Jul 23, 2018 By: Keep It Spicy Member since: Jul 23, 2018
    #1
  2. NickGrogan

    NickGrogan UKBF Ace Free Member

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    That's good advice.
     
    Posted: Jul 23, 2018 By: NickGrogan Member since: Nov 15, 2012
    #2
  3. Mr D

    Mr D UKBF Legend Free Member

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    The easiest and cheapest source of funding is family & friends. They can invest because its you.
    Dry rubs and marinades sounds good, something that can have repeat buyers and can be common in households with a more daring cook / chef / man wanting to burn meat in large quantities. :)

    Your costs are too large for your money? Can you cut the costs down a bit?
    Smaller version of your business - basic pots with printed labels, smaller selection of items, cheaper jars / packets etc. Then use your profits over time to expand and enhance your items.

    One of the traders at the food & drink expo a couple of months back had small tubs of herbs. I can't quite fit my thumb in the tub that's how small it is.
    Low price low cost item and he spent more on marketing than he did producing. Marketing tending to be a big cost for new products.
     
    Posted: Jul 23, 2018 By: Mr D Member since: Feb 12, 2017
    #3
  4. The Byre

    The Byre UKBF Ace Free Member

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    And as @NickGrogen points out, that was good advice and would be what I would also advise.

    Or as Branson says "Screw it! Let's do it!"

    I have seen people start film studios with £3,000 and an engineer create a company that today has a near monopoly World-wide on a certain type of electric motor used for pumping liquids (water, oil, sewage, etc.) with a few thousand dollars. I have seen a 20-store retail chain begin with a man selling eggs from a van and a huge pizza manufacturing operation with several factories begin with one young Italian guy in a garage in Germany.

    Most businesses start small. Virgin was a shop selling cassettes. Hewlett Packard was a garden shed and two guys building basic test equipment. I started a news agency with a PC, a telephone and a fax machine.

    Nobody is going to give you X-thousands to find out IF your business will succeed - but they will give you X-thousands to get a piece of the action when they see you succeeding!
     
    Posted: Jul 23, 2018 By: The Byre Member since: Aug 13, 2013
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  5. obscure

    obscure UKBF Ace Free Member

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    Apart from a few specific exceptions the Government/Grants aren't going to pay for you to have a business. There are a few grants targeted at specific areas (the young or geographic locations that have been hit by the collapse of major industries) but in general the only grants out there are for specific purposes such as marketing or staff training. There are no bags of money that are handed out for you to grow your company. You need to use savings, borrow from friends/family, raise investment by giving up equity or borrow from the bank..... or sell the product you have and use the profit to grow the company.

    Marks and Spencer started out as a market stall.
     
    Posted: Jul 23, 2018 By: obscure Member since: Jan 18, 2008
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  6. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

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    Rather than looking for money to get going, can you not limit yourselves to say under 5 items maybe only 2 or 3 and make a start proving your concept to the market. It could be via the local market , hotels or shops. after a year you can go to a investor's with a proven record and a real reason to ask for the money to expand based upon what you have achieved
     
    Posted: Jul 23, 2018 By: Chris Ashdown Member since: Dec 7, 2003
    #6
  7. NickGrogan

    NickGrogan UKBF Ace Free Member

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    Its also the hardest and most expensive if or when it all goes wrong and you have to tell your parents, brothers, sisters, etc that you've lost all the money and will they'll never get it back.

    A quick look on amazon shows this kind of product sells for £3 to £10 on amazon, so it shouldn't be costing you more than £1 to £3 per packet, including ingredients and packaging.

    As Chris has mentioned above 2 or 3 flavours is a good start, 10 packs of each should cost between £20 to £60 in total.

    Sell on amazon or ebay and go from there.

    How much funding are you looking to raise and what for?
     
    Posted: Jul 23, 2018 By: NickGrogan Member since: Nov 15, 2012
    #7
  8. Keep It Spicy

    Keep It Spicy UKBF Newcomer Free Member

    14 1
    Thanks for the feedback, I do appreciate the comments, but I fear that I may have given the wrong impression. We're not after a free handout... we've set aside personal funds, but we're short of approx 30% startup costs.

    I'm enquiring about the grant route because of the exposure and mentoring it can provide. (Could really do with the mentoring as this is a new field for me). As mentioned, I work in eCommerce & app development. I'd say about of the quarter of the work the boss gives me to do are for projects funded by NEBSF. i.e. partially funded websites for startups & SMEs.

    I have approached NEBSF, but there's no assistance available for that sector. (Although I could be eligible for £2800 grant for a website, lol)

    While we can operate the business from home, our local authority have advised us we need a stainless steal kitchen / production area and separate equipment to our domestic equipment to get approved. Something we didn't anticipate. So we're researching cuckooing a commercial kitchen outside of business hours or converting the garage.

    We have the unit cost price down to £3.06 p/kg for the dry rubs (ingredient & packaging) when producing 190kg of prroduct. So that a canny amount of stock we have to buy & store.

    We're going to market with 3 dry rubs, but hanging back on larger scale production of wet marinates, because far to many regs involved with Newcastle council atm until we can afford our own commercial unit.

    I think to fill the shortfall, a loan or save up for 6 months is the probable course of action.. I just want to see if there's help out there for non-techy startups. I dunno, maybe I could create an app to go with it to get around the hurdles. :-D
     
    Posted: Jul 23, 2018 By: Keep It Spicy Member since: Jul 23, 2018
    #8
  9. Mark T Jones

    Mark T Jones UKBF Big Shot Full Member

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    Grants are typically cause-related and often regional

    So for example you can R &D credits, you might get a grant for employing people, or for taking on premises in an rmeting area etc etc

    They also tend to come with terms such as matched funding etc

    What you won’t get is a grant to start your business

    I’m not sure who you spike to at Funding Circle, but you were badly advised - they need 2 years filed accounts to consider you.

    You could try Start Up Loans ( as the name suggests, it is a loan, but underwriting is slightly easier than banks and they will allocate a mentor.

    To managed your expectations, ‘unsecured’ in this scenario means that there are no charges over assets. PGs will always be required
     
    Posted: Jul 23, 2018 By: Mark T Jones Member since: Nov 4, 2015
    #9
  10. fisicx

    fisicx It's Major Clanger! Staff Member

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    Step back a bit and consider how you are going to market the product.

    There are already a huge number of online businesses selling rubs marinades and other spice products. They all market their products offline: magazines, postcards, vouchers and so on. They go to shows, fairs, food and farms shops and so on to demonstrate their products. All of this means the cost of production is going to be a fraction of the total cost (of which marketing will be by far the biggest chunk).

    Why not start by selling locally at the farmers markets. Do promos in the local foodie shops. Have a demo at the garden centre. Test the market and see if the business is viable.

    As others have said, you don't need a lot of money to do this. Which means you probably don't need funding yet.
     
    Posted: Jul 23, 2018 By: fisicx Member since: Sep 12, 2006
    #10
  11. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

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    I would go back to the local authority and ask the minimum conditions, many small cafe etc don't have all stainless etc but just use domestic equipment in a clean area, tiled area around the food preparation area, easily clean floors, separate containers for products etc, I think they may be mistaking you for a much larger operation

    One area you must be spotless on is for nut allergies

    You must write to any council when asking for advice so you have proof of what was written rather than phone calls which are not recorded
     
    Posted: Jul 24, 2018 By: Chris Ashdown Member since: Dec 7, 2003
    #11
  12. Keep It Spicy

    Keep It Spicy UKBF Newcomer Free Member

    14 1
    Thanks for this.. I will head back and query them.

    My youngest daughter has a nut, dairy and egg allergies... so we're well savvy on that area,.. i do miss my nuts :(
     
    Posted: Jul 24, 2018 By: Keep It Spicy Member since: Jul 23, 2018
    #12
  13. Keep It Spicy

    Keep It Spicy UKBF Newcomer Free Member

    14 1
    Great advice, thank you.. i suspect we're running before we can walk
     
    Posted: Jul 24, 2018 By: Keep It Spicy Member since: Jul 23, 2018
    #13
  14. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

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    One area worth investigating is that many local papers produce a monthly magazine aimed at probably the better off and includes all things in the county be it Gala photo's independents starting up. classy restaurants and pubs etc

    Write up a good story and send to the editor, who knows the least amount they have to do with it, the better chance of getting a free or cheap story in the magazine,
     
    Posted: Jul 24, 2018 By: Chris Ashdown Member since: Dec 7, 2003
    #14
  15. billmccallum1957

    billmccallum1957 UKBF Ace Full Member

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    Posted: Jul 24, 2018 By: billmccallum1957 Member since: Feb 11, 2016
    #15
  16. Keep It Spicy

    Keep It Spicy UKBF Newcomer Free Member

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    I'd have never of thought of that. What a brilliant idea! Thank you!
     
    Posted: Jul 25, 2018 By: Keep It Spicy Member since: Jul 23, 2018
    #16
  17. Keep It Spicy

    Keep It Spicy UKBF Newcomer Free Member

    14 1
    Newcastle upon Tyne, I'm 40 and the wife is 38.

    Already spoken to Newcastle council RE any help and guidance... She said no, after she picked herself up off the floor and stopped laughing.
     
    Posted: Jul 25, 2018 By: Keep It Spicy Member since: Jul 23, 2018
    #17
  18. mattk

    mattk UKBF Newcomer Free Member

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    How much are you looking to raise? Have you considered crowd funding?
     
    Posted: Jul 25, 2018 By: mattk Member since: Dec 5, 2005
    #18
  19. billmccallum1957

    billmccallum1957 UKBF Ace Full Member

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    Posted: Jul 25, 2018 By: billmccallum1957 Member since: Feb 11, 2016
    #19
  20. Keep It Spicy

    Keep It Spicy UKBF Newcomer Free Member

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    Thank you. I am aware of them through work, but for some reason I never thought of approaching them
     
    Posted: Jul 25, 2018 By: Keep It Spicy Member since: Jul 23, 2018
    #20