Great new business idea

[Wesley1717]

I have been researching the market for 12 months I've contacted manufactures, clients, however, there is only one hurled pegging me back from starting. I have loads of potential orders that will be continuos for years.
Now here's the hard part, I just can't seem to get funding for my business and don't really know what avenues to go down. This is the first time I have ventured on my own and to be honest I'm a little bit out of my depth.
Any advice or help on the matter would be brilliant.
I'm based in Liverpool but looking to go go nationwide.

 

[fisicx]

So how much money have you got? What incentives are you offering lenders?

I'm assuming you have already sold the dog, stopped skysports, are eating value foods and working 3 jobs - all to try and get some money in the bank.

How much do you need and for what?

 

[Wesley1717]

I'm offering my total commitment to the business and the chance to earn huge profit margins.
I currently have £10,000 of my own money which I've saved up over the years but my business would need £40,000 to start with. I currently do not know where to go and who to speak to.

 

[cjd]

Start by not saying things like 'huge profit margins', no-one will believe you.

Only you and your family and friends will invest in an 'idea' - especially from someone with no track record. That's where you start. Once you have a product and some sales you might get other people interested. You have to have your own skin in the game first.

 

[Wesley1717]

You see that's the point if I had the product and the sales then I wouldn't need an investment.
Maybe I should just start small and see where it takes me.
Thanks for the advice though I really appreciate it.

 

[fisicx]

I'm offering my total commitment to the business and the chance to earn huge profit margins.

Offering total commitment means nothing. Are you giving up your job, all your freetime and living the life of a pauper?

How big are these huge profit margins? If I invested £30K will I see a return of £60K in the first year increasing to £250 in year 3? That's what I consider to be huge profit margins. And you will only get a fraction of that because I'm putting in most of the money.

...but my business would need £40,000 to start with.

Like I said before: what do you need this money for?

 

[Wesley1717]

My projections for year 3 are £750.000 net profit but I don't want to divulge to much infromation on here. I was merely looking for a bit of advice and guidance. As I have stated before I have already gained potential clients and my projections are based solely from working with my Liverpool clients.

 

[MOIC]

Maybe I should just start small and see where it takes me.

^^This^^

 

[cjd]

If you can start small then that's the thing to do - not only does it get you started and proves a product and a market and it means that you don't need to give most of your business away to achieve it.

 

[Wesley1717]

I'm in the process of getting samples delivered and if correct I will be placing an order but this is only one product. I'm finding it hard work sourcing my other products but hard work pays off I suppose but thanks for your comments. Hopefully when I'm established I could maybe bring in a business partner.

 

[fisicx]

If you can make a success of one product then maybe you don't need more. You get to keep all the money for yourself rather than give away 75% of the business. Can you start up with just your £10K and one product? Or do you need the £40K investment to procure and market that one product?

And these potential orders, how firm are they? Have you actually got letters of intent or people banging on the door asking when they can get them? Do you even have exclusivity or will people be selling them on ebay at a cheaper price a week after you launch?

 

[NickGrogan]

I have loads of potential orders that will be continuos for years.

Potential orders as in someone said they like it? Or orders as in I'll take 1000, when can you deliver?

If the later, then you don't need finance.

No product based business that you can start for £40k is going to make £750k in year 3, competitors will enter the market and drive margins down very quickly.

 

[Wesley1717]

In reference to Nick.
Competitors will only be able to match my price however I will have first run on the market.
And as for the orders I have 2 clients that want the product as soon as I have it in the UK both clients want in excess of 1000 units. I will making £200 on each unit. I have more clients that I have to visit over the coming weeks, so £750,000 is the low end

 

[fisicx]

The point Nick was making was that competitors will soon import the products themselves and undercut you. You make have a great run for a few months but it's unlikely you will be able to sustain the business at the same level for very long.

I had a friend doing similar, he was making about £120 profit per item. He shipped around 50,000 before his competitors caught on and sales dropped by about 80%. He made a good profit for a while but it was never going to last. The only way it might survive is if you have exclusivity and the Chinese don't flood the market with low cost clones.

 

[Wesley1717]

Oh I see your point, well all I can do is start the business up and see where it takes me hopefully by the time other companies see the potential of my products and the target audience I will already be well established. That's why I feel funding is a must for my business to succeed otherwise the slow I start the greater the chance for someone to catch up to me

 

[Toby Willows]

Start small and build up slowly. Borrowing and trying to grow a unproven product (which it seems your's is) usually results with you turning up on the insolvency sub-forum in six months time wanting advice on the Spongebob plan.

Get some real sales behind you first, then you'll know the potential of your product. Promises and "I like your product" are worthless.

 

[NickGrogan]

I have it in the UK both clients want in excess of 1000 units. I will making £200 on each unit.

Assuming the product costs you more than £1, you have £201,000 of orders ready to be placed. If you're making a 20% margin, then you have £1,000,000 of orders ready to be placed.

Either way if you have orders from credit worth clients for around £1,000,000 then you don't need to borrow £40k.

Competitors will only be able to match my price

What makes you think this? If you're buying one quantity and I've got deeper pockets and want to buy 10x as much, I'm pretty sure that I'm paying less than you. And if the margins are that high, I'll launch my own branded version at my own price,

 

[Wesley1717]

Nick I see your point, this is what worries me that's why I decided to come on to the forum and get some advice if it is out there. I have just applied for a business start up loan plus I've got some money myself, so I'm going to just take the plunge and order my products