Business Partner Advice Needed

[David CAPS]

Hi there, I previously posted here seeking a business partner however I have no idea if this is a realistic aim to find someone willing to invest money but hopefully some of the more knowledgeable members of the forum can tell me where I am going wrong and maybe even guide me on how to find a business partner if possible?

The basics of what I have:

• I opened my retail store on the 7th April 2015
• I am the sole owner of the business
• My business sells Inks & Toners, both Original brands and Compatible alternatives, I also trade gaming consoles and games, finally I also sell a variety of computer related accessories such as memory sticks and cables etc etc as well as repairing and servicing Laptops
• Turnover for the first year is looking like being £80-90k with profits of around £20-£30k
• I have just recently finished branding my store with a new logo, color scheme and layout which I think is quite nice (will try add some photos if required)

What I would love to happen is find a business partner who either wishes to provide a straight forward loan with an agreed amount to be returned or if preferred I would more than happy to discuss a percentage of the business to be shared.

If I could find an investment of around £25-30k my first step would be to hire an old colleague of mine whose knowledge of the Ink & Toner industry is second to none as he would automatically bring with him a database of sales leads as he currently works for a large company who supply to the whole country but whose prices are around 40% more expensive than mine so I am sure I could capture alot of business with his help whilst also freeing myself up from alot of the day to day work which he already knows how to do due to his current employment.

My second step would be to develop the website so that I can start selling my products online as well as providing live prices to potential clients who are interested in trading or purchasing products from the business.

Once the above two stages were complete I would look to see Christmas out and the New Year in then providing the business is operating how I envisage it then I would like to start possibly looking into the prospect of opening a second store about 10 miles away in time for the following tax year.

I know alot of the above is just ambition but if you can help guide me in anyway into how I can find a potential investor then your help would be most welcome as I am a little bit confused as to where to even start as alot of the basic google searches etc etc seem to lead to alot of dead leads.

Thank you in advance as I eagerly await your help!

David

 

[Carl Mintern]

If you are making 30k profit/annum why not just wait a year and use that money?

That's the giant red flag I'm sure any investor would want answered.

 

[David CAPS]

Hi Carl, thanks for the reply!

I guess the truth is if I don't find an investor then naturally that is what I will have to do but waiting a year is the easy option to take and I have enthusiasm and drive which I would like to move forward quick which if that is seen as a negative by any potential investor then maybe they would not be the right person to invest as I don't want to just sit and wait for things to naturally happen I want to make them happen as quick as possible and capitalise on what I believe is a great business model.

What if someone setups up in competition before I expand? what if the person I have headhunted gets a better offer? these are all the things that I have to consider and is why I believe I should try and move forward whilst I dont have any obstacle other than those of a financial nature.

Thanks again for replying though its much appreciated!

 

[MOIC]

Are you sure you have calculated your NET profits correctly?

Deducted All your expenses.

Deducted all your staff (including your) wages.

Deducted all your purchases & related costs.

With the figures you have quoted, you don't need a partner to expand.

I'm not sure of your reasoning in giving away a % of your business, when all you need is (cheap) finance to expand.

It makes sense to sit tight and build your profits up for the first two years and expand organically, without outside help.

Good luck in what you decide to do.

 

[Carl Mintern]

If your figures are accurate and your forecasts are good (ie all the things an investor would check) then I'm sure you could just get a bank loan?

If your business grows as you expect this is definitely going to be better for you short, medium and long term financially compared to giving away equity.

 

[David CAPS]

Hi again, yes my figures are 100% accurate however I can not borrow from the banks as I already have taken a £13.5k loan out when I first launched and so sadly that is not an option for me right now.

I am quite reluctant to just sit and wait as I can already see that people are taking note of my business and I want to stay one step ahead not fall behind to a better funded but newer setup just simply because I stopped trying to move forward.

I have already missed the business boat once in life as around 12 years ago I was briefly in a 50/50 partnership (on a very small scale website) with another person and whilst I sat and waited for opportunities in life he went on to make around 60-80m by having a work ethic and drive in what he believed and so I take his story as inspiration and hopefully can make a success of what I believe in. (yes the person uses this website or at least I know he used to)

 

[Annoying Donkey]

If I could find an investment of around £25-30k my first step would be to hire an old colleague of mine whose knowledge of the Ink & Toner industry is second to none as he would automatically bring with him a database of sales leads as he currently works for a large company who supply to the whole country but whose prices are around 40% more expensive than mine so I am sure I could capture alot of business with his help whilst also freeing myself up from alot of the day to day work which he already knows how to do due to his current employment.

Taking someone on as an employee is expensive and risky. Why not just offer him commissions on any sales. If he proves to be good, then offer an employee position... Then you won't need the extra investment...

 

[The Byre]

my first step would be to hire an old colleague of mine whose knowledge of the Ink & Toner industry is second to none as he would automatically bring with him a database of sales leads as he currently works for a large company who supply to the whole country but whose prices are around 40% more expensive than mine

If these are in the form of a database, then that would be a contravention of data protection laws and ALSO would leave BOTH of you open to claims for damages from his present employer.

 

[ethical PR]

Why would you want to work with someone who is willing to steal from his current employer?

If your figures are 100% accurate surely the £13.5K bank loan is accounted for as a cost against the business and is being repaid to the bank.

That being the case as others have suggested some type of loan would be your best option.

 

[David CAPS]

Thanks for the replies although I do find it a little harsh to presume that the person in question would be breaking the law or is a thief stealing from his current employer should he start working for me.

I can assure you his knowledge and contact base is not a protected source, it is something he has worked hard to build and he would not be stealing from his current employer in anyway as people are free to purchase their consumables from whoever they wish and if he helps me achieve more sales due to our prices and products then I fail to see how that is theft as he would be doing a job that he would be paid to do and all within any rules or terms of his current contractual agreements should he seek to terminate that contract.

*As for the loan it is being paid back to the bank as agreed and is now in the 6th month I believe.

I get the impression that my initial thoughts about the lack of people out there happy to invest in a small business like myself sadly maybe true, I shall continue to search though!

David

 

[Ashley_Price]

he would automatically bring with him a database of sales leads as he currently works for a large company who supply to the whole country

People aren't being harsh in responding to this the way they have. Do you know what is in your friend's contract of employment or what will be in the termination documents? Many firms have "non compete" clauses, which mean if the former employee works for someone else (or set up on their own) in the same industry, they are not allowed to contact their current firm's customers for a period of time (usually a year or two).

Just because your friend has worked hard to build the customer base, it will be "owned" by his current employer.

Seriously, it is something you would need to get him to check, so you don't assume he can just bring the list with him, then get a shock when he leaves the firm.

 

[David CAPS]

Hi there, yes I know what is in his contract and yes he is 100% free to come work for me and bring his client list with him, I have discussed this in detail with him and I have seen his contract of employment which is very very basic and providing he does not set up his own business within x amount of miles of his current employment, which he would not be doing then contractually he can contact any of his current clients as an employee of my business to give quotes on their consumables used.

 

[Ashley_Price]

I have seen his contract of employment which is very very basic

That sounds good, but they may "wise up" when he leaves and he signs a termination document that includes the "non compete" clause.

Just assume he will not get to bring the list with him. If that happens what will you do?

Always have a second (and preferably third) plan in mind for if things don't go as you expect.

As the saying goes "Hope for the best... but prepare for the worst".

I am not being negative, just realistic (hang on, that doesn't sound like me). I have been self employed for 19 years and run several businesses, so I know that things change in a very short time and if something you expected to happen doesn't, it can really throw you out, if you've not prepared.

I obviously hope everything goes right for you, we all want to succeed in business.

 

[The Byre]

If your friend developed a client list in pursuance of full time employment with his present employer, then that list is their property.

 

[movietub]

In regard to OP,

For such a small investment (IE one that would be made personally by someone looking to get into something new), you should promote the idea, the brand values and give details of product/service and industry ahead of numbers.

You're basically pitching to attract someone that is looking for an opportunity in whatever area you're looking to setup business in.

So focus on generating interest and attracting passion first, then offer business plans via private communication with those that seem genuinely interested.

As it is, you're saying very little about what you do (for all I know it's a business that could cross pollinate with one of my interests! - But I don't know...), and you're also giving snippets of numbers which is never a good idea. Only give fully explained and evidenced numbers by way of a comprehensive plan. Other than a broad indication of the level of finance you need to raise you can ditch the numbers altogether, at least initially.

Structure like this is better:

1) Looking for BP/Investor looking for xxx level of involvement, and experience or interest in xxx sector

2) Start-up costs of business expected to be c£xxx. I am flexible on ownership structure and level of capital input.

3) This business is justified because of xxx (justify the opportunity you see).

4) Here is a bit about me and my background...

5) Here is a bit about the sort of person I'd love to work with and what I would like them to bring to the table.

 

[Chris Ashdown]

If your friend is happy to leave his company to work with you and has no problems in taking their customers with him, he may well do the same to you next year for a better offer