How much do you ask for?

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How much do you ask for?

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maeintexas

posts: 8

Jun 11, 2008 6:20 PM ET Quote Report Abuse

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When you go for a loan - how much do you ask for? Do you ask for just the start-up amount, or should you also include 6 months to a year of expenses? Should you figure up start-up and 6 months to a year operations costs to determine how much cash you need to come up with as equity, or do you just figure up start-up? This is where I get confused...

robertj

posts: 1458

Jun 11, 2008 8:10 PM ET Quote Report Abuse

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To find the amount of capital required I would

1 Calculate the amount needed to open the doors (start up costs)

2. Add to that the amount needed to maintain the business until it will support itself from the revenue.

3. Add 3-6 months expenses as a safety margin.

If you are able to borrow that amount and are comfortable with the debt, then move ahead. If not then you will need to consider other ways to acquire the capital you need.

-------------------------

Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

maeintexas

posts: 8

Jun 12, 2008 4:02 PM ET Quote Report Abuse

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Here is the question of the year: how do you determine how much you need to maintain until the business supports itself? I`m going into a retail/service business. I`m planning heavy marketing and lots of events to draw people in, but how do I determine sales/registration numbers? (At least a reasonable number for projections....)

robertj

posts: 1458

Jun 12, 2008 5:24 PM ET Quote Report Abuse

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When we work with client`s on this, we start with some assumptions - which are based upon some foundation of facts.

For example, the average conversion rate for a web site is around 1/2% to 2%

If one intends to use something outside that range- one should have a strong reason.

StartUpSmart

posts: 51

Jun 13, 2008 6:19 PM ET Quote Report Abuse

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Hi,

My advice: talk to people who are in the business already. Getting advice from start-up consultants is great but nothing beats talking with somebody who`s been there. People like to help others so you shouldn`t have any issues finding some solid resources. Ask them the same questions you asked above.

Additionally, you may be able to get these individuals to be on your advisory board. They should go in your business plan. Banks and other funders want to know you have a solid advisory team and access to resources and help.

Good luck!

-------------------------

Need Capital For Your Business...Start Here!
http://www.startupsmart.net
Joe F. Clark
Senior Principal
Start-Up Smart, LLC. - the clever way to accelerate your business
jclark@startupsmart.net

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