Do I look for investment or loan?

[Esk247]

hmm, still pondering after my visit to the bank and there lack of vision.

I wonder if i should start looking for a professional investor? although, from what i understand, they are like needles in haystacks.

I have recently transferred a lot of old websites, info sites and such to someone else for a small fee that has given me a bit of free capital, this capital is not enough to invest in rental but does leave me free for 3 months pretty much, i can work and not need to generate that much in cash.

I see this as a perfect opportunity to get back in to doing what i did back in 2003, the art and accessory business.

i've identified a great location, a shop within walking distance of my home, superb footfall and the current owners are already generating a profit but really want to retire as they're quite elderly, i have an agreement with a friend to supply stock free of charge initially to try the shop out.

the first bank turned me down based on the fact they want me to basically 'get a proper job and raise the money yourself, don't bother asking for a loan, go away' so i'm going to try someone else first.

question is..where do i find an investor to cover the first 2 years of rental and services? i can cover the fixtures and fittings, advertising etc, i've saved money for that eventuality.

i would give it a go online but to be honest, we're not getting anywhere, I would need to invest over £10,000 online to generate any revenue and i'm not prepared to do that, with a concrete location and good footfall the money is better spent in renting a shop and then building the online side when i can actually give people leaflets when they purchase an item in-store e.g. they can re-order online.

any ideas?

 

[Liybpg]

I'm not an expert, but as I understand investors would like to finance rent and normal expenditure. They would like to see an investment, which will allow this business to grow which will give them multiples of their investment. For this kind of business I don't think you can really find an investor unless they are just personally interested in this kind of thing, I doubt that they will be professional investors.
Can't you get a loan against your house or other assets (if you've got any)? Plus, bank might be right, 10K is not that much, if you could invest at least half of it I'm sure bank will be a bit more happy to help.

 

[Esk247]

well i wouldn't mind loaning the amount from an investor e.g. they take a portion of the business profits for a declining amount over a period of time, something like 40% of profits in year one, 30% in year two and so on.

if i need to raise another £10,000 on top of what i've already saved for fixtures and fittings i may as well just try and get back in to the work force and give up on business entirely. its got so much more difficult to raise finance for business these days, they seem to want you to raise all of the money first then they'll loan you a tiddly amount..which i wouldn't need.

the only thing i can get investment for is an invention, like a heli-pig..e.g. a politician with wings

 

The only investor you will attract will be someone local and known to you; the project as too small and won't generate the returns for a professional investor.

The banks aren't supposed to have vision, they are supposed to lend money with minimal risk (they tried having vision and got it horribly wrong!) To interest a bank you will need to provide personal security.

Many small businesses are founded on personal loans and credit cards - have you looked in to this?

 

[Esk247]

The only investor you will attract will be someone local and known to you; the project as too small and won't generate the returns for a professional investor.

The banks aren't supposed to have vision, they are supposed to lend money with minimal risk (they tried having vision and got it horribly wrong!) To interest a bank you will need to provide personal security.

Many small businesses are founded on personal loans and credit cards - have you looked in to this?

we would need to max out 3 different cards just to pay rental and with the extreme amount of interest that would be owing it would prove to be an incredibly expensive way of renting a shop, we'd be forever paying off the cards.

i guess i'll have to think about getting back in to employment first time since 2007...taking a month off first though

 

[BusinessRookie]

I disagree with some of the points posted here and believe that it is still possible to raise finance for amounts less than £25k, you've just not found them yet.

How many banks have you visited? Each bank has a different lending policy and each business manager can sign off their own discretionary loan amounts. Banks typically provide 'match funding' and don't like to finance much risk.

Visit the business section of your local authority/council; there's a lot more help than you've been exposed to so far.

E.G. Businesslink advice, grants, Government funding, lottery funding (ARTS council?), EU Funding, Regional development agency (who have a programme for loans under £25k), Princes trust, etc

Be more determined and keep searching for funding

By the way: would you get further asking to fund fixtures, fittings and stock rather than rent and rates?

 

[internetspaceships]

Two things in what you've said so far would jump right out and hit me between the eyes as an investor.

1. " Does leave me free pretty much for three months I can work and not need to generate that much in cash "
2. "I'm taking a month off first"

Just how committed to this are you and if you are looking for someone to invest their own hard earned cash, why should they invest in you?

I'm not being an a5s, I'm asking as any investor would.

 

we would need to max out 3 different cards just to pay rental and with the extreme amount of interest that would be owing it would prove to be an incredibly expensive way of renting a shop, we'd be forever paying off the cards.

i guess i'll have to think about getting back in to employment first time since 2007...taking a month off first though

You will probably find that credit cards are less expensive than a professional investor. Though you will have to start making repayments immediately..

 

[Esk247]

Two things in what you've said so far would jump right out and hit me between the eyes as an investor.

1. " Does leave me free pretty much for three months I can work and not need to generate that much in cash "
2. "I'm taking a month off first"

Just how committed to this are you and if you are looking for someone to invest their own hard earned cash, why should they invest in you?

I'm not being an a5s, I'm asking as any investor would.

very committed...i've been running small online businesses since 2003 and set up my own independent business in 2007, its just that since the initial boom of making a profit, funds have dried up due to my location and various other expenditures (namely replacing my car and all of my computers in 2009 at huge expense just to keep up to date) since then i haven't been able to turn a profit from my day job, esk247, and have been doing a lot of charitable work instead.

now though its time to get back in to earning a living and investing in future projects but i need a cash injection to do this.

there are alternatives e.g. :

1) Get a job (finding this hard due to being self employed i seem to only get success at management level re: interviews)

2) Get a loan (this is fine but the amount i'm asking for is quite high, the bank will lend me £5,000 no problems today but i need 4 times that amount)

3) Princes Trust (they too will lend me £5,000 if required on a more relaxed loan system as i'm under 25)

4) Friends/Family (they're not business investors, they wouldn't have any idea what to do and it's quite a large sum of cash for them)

5)Get back to running Esk247 (the business isn't turning a profit and would need more investment to get back up and running, it's not an area of expertise for me e.g. website design and it is highly competitive these days)

a few options to look at, for the moment i'm going to be job hunting though, i just don't see how i can bring in the required amount without finding a good job for the next few years to secure some funds

 

[internetspaceships]

Thanks very much for the extra info. That actually paints a much better picture of what you're trying to do.

Thanks

 

[Tony_Round]

i would give it a go online but to be honest, we're not getting anywhere, I would need to invest over £10,000 online to generate any revenue and i'm not prepared to do that, with a concrete location and good footfall the money is better spent in renting a shop and then building the online side when i can actually give people leaflets when they purchase an item in-store e.g. they can re-order online.


With this comment in mind, if its not worth doing online why bother doing the shop?

I know that seems pretty cut and dried, and I don't confess to be a retail expert, but would the shop get more footfall than a good website with good SEO etc etc. I know there are different factors like type of product etc. but the way you describe it is that you want to start the shop with the ultimate aim of building the online side, well seeing as the online side would be cheaper to build up why not do that?

 

[Billmccallum]

hmm, still pondering after my visit to the bank and there lack of vision.

I wonder if i should start looking for a professional investor? although, from what i understand, they are like needles in haystacks.

I have recently transferred a lot of old websites, info sites and such to someone else for a small fee that has given me a bit of free capital, this capital is not enough to invest in rental but does leave me free for 3 months pretty much, i can work and not need to generate that much in cash.

I see this as a perfect opportunity to get back in to doing what i did back in 2003, the art and accessory business.

i've identified a great location, a shop within walking distance of my home, superb footfall and the current owners are already generating a profit but really want to retire as they're quite elderly, i have an agreement with a friend to supply stock free of charge initially to try the shop out.

the first bank turned me down based on the fact they want me to basically 'get a proper job and raise the money yourself, don't bother asking for a loan, go away' so i'm going to try someone else first.

question is..where do i find an investor to cover the first 2 years of rental and services? i can cover the fixtures and fittings, advertising etc, i've saved money for that eventuality.

i would give it a go online but to be honest, we're not getting anywhere, I would need to invest over £10,000 online to generate any revenue and i'm not prepared to do that, with a concrete location and good footfall the money is better spent in renting a shop and then building the online side when i can actually give people leaflets when they purchase an item in-store e.g. they can re-order online.

any ideas?

Your signature indicates 3 online businesses, you state that you have replaced car and computers in the last year and have (I think) £10,000 capital to invest, you have a supplier who will provide stock (presume on sale or return).

Why not take the £5k bank loan and run from there?

An Arts and accessories business in Whitby will not provide a substantial return for an investor for at least three years (educated guess).

If an investor were to get on board, what incentives for reducing the equity? If the business does not generaate enought profits to give you cash for a buyout or if it does take off, why would they want to reduce their equity?

What does your sales forecast say?

 

[Esk247]

With this comment in mind, if its not worth doing online why bother doing the shop?

I know that seems pretty cut and dried, and I don't confess to be a retail expert, but would the shop get more footfall than a good website with good SEO etc etc. I know there are different factors like type of product etc. but the way you describe it is that you want to start the shop with the ultimate aim of building the online side, well seeing as the online side would be cheaper to build up why not do that?

the online businesses would need investment to make them viable, we haven't put much effort in to sales while i concentrated on trying to develop a web design business. As the web design business is behind schedule and the software i have is beginning to fall out of date I have decided that i want to concentrate on a different business, art and accessories, at the moment we've looked at art sales only but i want to develop the accessories side which i haven't attempted either online or via a shop.

my query is whether i should invest £10,000 online or £20,000 in a shop that can be combined with a more basic web presence.

 

[Esk247]

Your signature indicates 3 online businesses, you state that you have replaced car and computers in the last year and have (I think) £10,000 capital to invest, you have a supplier who will provide stock (presume on sale or return).

Why not take the £5k bank loan and run from there?

An Arts and accessories business in Whitby will not provide a substantial return for an investor for at least three years (educated guess).

If an investor were to get on board, what incentives for reducing the equity? If the business does not generaate enought profits to give you cash for a buyout or if it does take off, why would they want to reduce their equity?

What does your sales forecast say?

if an investor were to take an interest they would not be required to invest in the same way you would for an invention etc. they can effectively 'Loan' the amount to me at a more favourable rate for myself and with the added option of being hands-on with the business if they require, using the store to promote and sell products/services they may have with another business e.g. the option to expand there current business without the full cost of staff, fixtures and fittings and stock.

i already run a small business and have been involved in the running of small shops in the past so i do have experience in this area and from what i understand, all i'm lacking is the initial capital.

i could start a business online only with another £5,000 investment from a bank loan or the Princes Trust but i just cannot see a way of doing it as the internet really is over burdened with discount options and high turnover warehouses, unique and handmade crafts are harder to sell online as they're niche but very rarely searched for on Google where as with a shop that has high footfall and is already recording profits in its current state i see less of a risk for an investor.

it's just one idea i've thought of, whether it has legs i don't know, if not then i'm certainly looking to return to employment until i can develop a sound business plan for an online retail website that has a growing turnover.

 

[Esk247]

oh and the three sites i have in my signature are just Esk247 which is being slowed down and the watch business which is a trial that i haven't got round to e.g. SEO trial, i've never finished it but will look at trying to beat some competitors in the coming weeks, it already receives dozens of hits a week from UKBF which is interesting in itself.

the other is the business i want to develop, we have the artwork in storage but it will cost to get it out and so i'm trying to clear a concise plan and direction for that business either a shop or a whole new website..not sure yet :|