Is this just a pipe dream?

[GannonP]

Hello,

Looking for some advice.

Basically, I'm going to find myself unemployed in a matter of days, with nothing else lined up in the immediate future. I'm applying for work but I've been toying with the idea of starting my event production service (I have over 10 years in the industry and the skills and contacts to make a go of this) but I have zero savings to rely on. I'm estimating at best it'll probably take a few months before I have clients on-boarded and money starting to trickle into the business. Therefore to get things up and running and give me a few months runway, I've been considering a £25k new business loan. Based on my cashflow predictions this would give me about 6-7 months before I need to have cash into the business. My question is, is this a realistic amount of injection and is this something I should even be considering or is it just a stupid idea?

Any advice or support would be great because anyone else I've tried speaking to about this offers up zero advice.

Thanks,

 

[MOIC]

If you've got experience and contacts in the field, it's far from a stupid idea, in fact I'd say it's what you should be doing, but . . . .

Don't underestimate the funds you'll need as well as paying it back.

Rule of thumb, double your required funds and half your expected sales. There are many 'hidden' costs and expenses you may have not factored in.

Speak to @Mark T Jones as he can offer sound advice as well s providing a template for cashflow forecasting and sales projections which you should be completing to get a realistic picture of what's needed.

 

[Mark T Jones]

If you've got experience and contacts in the field, it's far from a stupid idea, in fact I'd say it's what you should be doing, but . . . .

Don't underestimate the funds you'll need as well as paying it back.

Rule of thumb, double your required funds and half your expected sales. There are many 'hidden' costs and expenses you may have not factored in.

Speak to @Mark T Jones as he can offer sound advice as well s providing a template for cashflow forecasting and sales projections which you should be completing to get a realistic picture of what's needed.

Thanks @MOIC

It's true, if you start putting a simple plan and projections together things will start to make sense. It will also raise questions, which may well throw you off your stride, but will be valuable in future (if it's doesn't raise those questions, you are almost certainly getting it wrong)

My primary business is in lending - and my advice would be to borrow as little as possible however your projections should show what you need and what the most appropriate form of borrowing would be

You might qualify for a Government-backed Start Up Loan up to £25k (there are some changes happening, but I don't yet know what)

 

[Shopclicks]

Any advice or support would be great because anyone else I've tried speaking to about this offers up zero advice.

A more sensible approach would be to take a job, any job. Then start this as a side hustle. No borrowing until you know you'll have the income to cover the debt.
Having to go to work every day is a pretty good motivator to focus on what you really want to do.

 

[Fagin2021]

It's not a stupid idea but do remember when doing your cash-flow projections that there may be a big time lapse between getting a client onboard, invoicing them for work done, and seeing the money in your bank account.

 

[GannonP]

If you've got experience and contacts in the field, it's far from a stupid idea, in fact I'd say it's what you should be doing, but . . . .

Don't underestimate the funds you'll need as well as paying it back.

Rule of thumb, double your required funds and half your expected sales. There are many 'hidden' costs and expenses you may have not factored in.

Speak to @Mark T Jones as he can offer sound advice as well s providing a template for cashflow forecasting and sales projections which you should be completing to get a realistic picture of what's needed.

Thanks for the advice. It doesn't seem like a stupid idea to me, but without anyone to bounce this off, I was becoming to think it was.

Thanks @MOIC

It's true, if you start putting a simple plan and projections together things will start to make sense. It will also raise questions, which may well throw you off your stride, but will be valuable in future (if it's doesn't raise those questions, you are almost certainly getting it wrong)

My primary business is in lending - and my advice would be to borrow as little as possible however your projections should show what you need and what the most appropriate form of borrowing would be

You might qualify for a Government-backed Start Up Loan up to £25k (there are some changes happening, but I don't yet know what)

Thanks Mark. I do have a business plan and a cash flow projection put together already, along with some dummy sales scenarios to identify my initial targets. Would you consider looking at these and providing some feedback?

Overall I think the cost estimates are fairly accurate, giving me approx 6 months of operating costs covered, some marketing, website and event/networking expenses, leaving around £15k surplus for supplier cash flow as projects start to come in.

The government-backed loan is the one I was looking into. I was thinking of acquiring that, then re-assess at 6-9 months if I need to borrow more depending on what sales look like.

A more sensible approach would be to take a job, any job. Then start this as a side hustle. No borrowing until you know you'll have the income to cover the debt.
Having to go to work every day is a pretty good motivator to focus on what you really want to do.

Thanks, I am considering this and is definitely a good way forward.

 

[GannonP]

It's not a stupid idea but do remember when doing your cash-flow projections that there may be a big time lapse between getting a client onboard, invoicing them for work done, and seeing the money in your bank account.

Thanks Fagin - Yes I'm estimating that I'd have clients on board by months 4-5 and cash into the business by month 6. I'll be charging 50% upfront (to help with supply cash flow), 25% halfway through a project and 25% on delivery.

Obviously, this is case by case depending on the client and/or project, but generally speaking, this is what I'll be aiming for.

 

[Shopclicks]

Overall I think the cost estimates are fairly accurate, giving me approx 6 months of operating costs covered, some marketing, website and event/networking expenses

If I'm reading this correctly, you'll have £10k to do that. What about living expenses and loan repayments?

 

[Chris Ashdown]

No experience of your area, but most companies invoice on the date completed, then state 30 days from date of invoice, to most companies they take a liberty and assume they have 30 days from the start of the next month, If your lucky they will pay at the end of that month, but many will string it out to the following month, so if you invoice at the beginning of a month, you may get paid on near 60 days or even 90 days

@Shopclicks Is a good suggestion, sales are hard to get and can stretch out from first contact, with events companies looking well into next year in their planning

 

[GannonP]

If I'm reading this correctly, you'll have £10k to do that. What about living expenses and loan repayments?

They are included in the operational costs.

 

[GannonP]

No experience of your area, but most companies invoice on the date completed, then state 30 days from date of invoice, to most companies they take a liberty and assume they have 30 days from the start of the next month, If your lucky they will pay at the end of that month, but many will string it out to the following month, so if you invoice at the beginning of a month, you may get paid on near 60 days or even 90 days

@Shopclicks Is a good suggestion, sales are hard to get and can stretch out from first contact, with events companies looking well into next year in their planning

It's very common in the industry for sales to take 30-90 days to close with a 50% on confirmation of the sale closing. But good point, on the terms. 30 days credit is what I'm expecting to provide. But to be competitive I may need to supply 90 days for a new client I've not been exposed to before, so I will double-check check I've factored that into my predictions.

 

[Shopclicks]

They are included in the operational costs.

If you earn at least £20k a year now and you have no savings, how do you expect to fund operating costs, some marketing, website and event/networking expenses over the first 6 months on top of living expenses and the loan repayment?

 

[Mark T Jones]

---

Thanks for the advice. It doesn't seem like a stupid idea to me, but without anyone to bounce this off, I was becoming to think it was.



Thanks Mark. I do have a business plan and a cash flow projection put together already, along with some dummy sales scenarios to identify my initial targets. Would you consider looking at these and providing some feedback?

Overall I think the cost estimates are fairly accurate, giving me approx 6 months of operating costs covered, some marketing, website and event/networking expenses, leaving around £15k surplus for supplier cash flow as projects start to come in.

The government-backed loan is the one I was looking into. I was thinking of acquiring that, then re-assess at 6-9 months if I need to borrow more depending on what sales look like.



Thanks, I am considering this and is definitely a good way forward.

I charge £100 for an jnitial review (that puts off most of the dreamers)

However, before doing that, take note of the other comments. Whist you seem more grounded than many, in reality nearly all projections are optimistic and many omit basics - you don't need to pay me for that!

 

[IanSuth]

6 mths from now takes you to xmas

I suspect a lot of the things you get may be xmas do's so you wont be able to do final invoice until they run which will be December - good luck seeing that £ before the end of Jan - remember to factor the xmas break into your cashflows

Also BEWARE of taking on business from companies in industries that traditionally go bust just after xmas (like retail and hospitality) - as a new supplier you may find those willing to sign on the dotted line are doing so as they think they can string out payment if they are struggling. You need to ensure you don't get taken down early by a bad bebt

 

[Paul FilmMaker]

Hello,

Looking for some advice.

Basically, I'm going to find myself unemployed in a matter of days, with nothing else lined up in the immediate future. I'm applying for work but I've been toying with the idea of starting my event production service (I have over 10 years in the industry and the skills and contacts to make a go of this) but I have zero savings to rely on. I'm estimating at best it'll probably take a few months before I have clients on-boarded and money starting to trickle into the business. Therefore to get things up and running and give me a few months runway, I've been considering a £25k new business loan. Based on my cashflow predictions this would give me about 6-7 months before I need to have cash into the business. My question is, is this a realistic amount of injection and is this something I should even be considering or is it just a stupid idea?

Any advice or support would be great because anyone else I've tried speaking to about this offers up zero advice.

Thanks,

When you're ready, if you go ahead, ping me your website. I occasionally put leads the way of an events company I film for. Part of what I do is events filming. Conferences etc... mostly.

So if you start it, let me know and I might be able to put the odd lead in your direction.

 

[GannonP]

---

I charge £100 for an jnitial review (that puts off most of the dreamers)

However, before doing that, take note of the other comments. Whist you seem more grounded than many, in reality nearly all projections are optimistic and many omit basics - you don't need to pay me for that!

Thanks, Mark - I'm going to revise my initial cashflow projection as a couple of the comments have helped me spot some weaknesses in my estimations. I'm also speaking to a startup advisor later this week who will be reviewing my business plan etc. But may still take you up on your offer. I will let you know.

6 mths from now takes you to xmas

I suspect a lot of the things you get may be xmas do's so you wont be able to do final invoice until they run which will be December - good luck seeing that £ before the end of Jan - remember to factor the xmas break into your cashflows

Also BEWARE of taking on business from companies in industries that traditionally go bust just after xmas (like retail and hospitality) - as a new supplier you may find those willing to sign on the dotted line are doing so as they think they can string out payment if they are struggling. You need to ensure you don't get taken down early by a bad bebt

Thanks, Ian - There's potential to do xmas parties, but my primary service offering will be for conferences, exhibitions and stakeholder engagement so I'm less worried about this type of risk. The sectors I'm also targeting are less likely to go bust too and are generally B2B only. But this info has made me more aware of potential risks ?

When you're ready, if you go ahead, ping me your website. I occasionally put leads the way of an events company I film for. Part of what I do is events filming. Conferences etc... mostly.

So if you start it, let me know and I might be able to put the odd lead in your direction.

Thanks, Paul - Really appreciate the help. I'll get this over to you as soon as it's up. It's likely that I'll require an event videographer from time to time too, so I can repay the favour ?

 

[HFE Signs]

The best advice is to start as a sideline and finance it yourself, keeping all your options open and giving you full control

 

[rachelwild]

Agreed. It's how I set up my business, Wild As The Wind Natural Skincare & Essential Oils. I only had £1.5k to spend, so I invested it all into carrier oils and essential oils, got myself a spot on a couple of markets where they provided the gazebo and tables etc, and I started making a profit from day one. Within five years, Wild As The Wind has become one of the leading retailers of UK essential oils, and is recognised as a world-class producer of two deeply beneficial, 100% natural, organic facial oils.

I think the ingredients for success are simple:

1. Show up
2. Be passionate - (care about your customers as much as you do about your products / services)
3. Develop your online skills

 

[Paul FilmMaker]

Thanks, Mark - I'm going to revise my initial cashflow projection as a couple of the comments have helped me spot some weaknesses in my estimations. I'm also speaking to a startup advisor later this week who will be reviewing my business plan etc. But may still take you up on your offer. I will let you know.

Thanks, Ian - There's potential to do xmas parties, but my primary service offering will be for conferences, exhibitions and stakeholder engagement so I'm less worried about this type of risk. The sectors I'm also targeting are less likely to go bust too and are generally B2B only. But this info has made me more aware of potential risks ?

Thanks, Paul - Really appreciate the help. I'll get this over to you as soon as it's up. It's likely that I'll require an event videographer from time to time too, so I can repay the favour ?

Thanks! That would be great! Otherwise, I just want what's best for my customers. And some of them have grown to the point they need a conference organiser!