Forums: Discussions for entrepreneurs and small business.

Hi everyone!

This is my first post.  And this is the first website/forum I have found where everyone seems to be positive and friendly. 

I live in a fairly small town outside of Tallahassee, FL.  Our 2005 population was 29,000 and our new home construction rate is soaring. 

I would like to open a party supply store/party planning service in my town.  Not anything too big, about 1500 square feet.  We do not currently have a supply store, we have to either order online or travel to Tally. 

I have done the research, and I believe there is a strong market for this type of store where I live. 

I guess where I am getting frustrated is trying to work with SCORE to get help/advice and so far I`ve talked with two different counselors who seem highly concerned that I will not be able to sustain a business with my town`s population.  I disagree.  It may be small now, but consider that it has grown from 14,000 to where it is now in the past 10 years.  The growth rate is even faster now that it is becoming more like a small city, rather than a "one red light town".

The other frustration I am having is with financing.  I just don`t know enough about it to understand.  Why is it that people keep telling me that in order to get financed I have to put up money of my own?  It`s like they are saying people who aren`t worth a lot of money can`t start their own businesses.  I`m not trying to get rich here.  I am married, have two children, my husband works. I just want to do something I love while still being close by my kids.

I do not have collateral.  We have a house and two vehicles, but none of them are paid for completely.  I do not have a lot of "net worth".  I`m just me, with decent credit and a lot of commitment and drive to do this.

Is there any hope for me?  Anyone out there have a similar lifestyle with a success story?

Thanks everyone for reading!

Consider this: The PC was introduced in 1983, and only became the first version of a desktop (dual floppy) in 1989. AOL was born only in 1991, but didn`t really take off until around 1995. That`s only 10 years ago!! It seems like it`s been around forever...but 10 years!!

Now consider the retired executives who work with SCORE. They`ve likely been retired about 5 years, minimum, and probably closer to 10. When they were finishing up as executives and CEOs of their career business, the computer was a newfangled invention. Is it any wonder that many of them don`t first think of e-commerce, Web advertising, and so forth?

A small town means nothing anymore. With global presence, advertising, and world-wide shipping, a "mom-pop" store in BooFoo, Nowhere can "appear" as large and powerful as IBM.

On the other hand, SCORE executives often have an abundant wealth of help, advice, and information about traditional things like financing, business plans, accounting, and so forth. The general idea is, "why should someone risk their money if you`re not willing to risk yours?"

How much are you risking in the "real" world of tangible goods and assets? Yes, you`re risking emotional peace of mind, your reputation among friends, and your fear of failure. Fine, but that doesn`t count for anything at a bank. Getting financing is all about risk: when will they get their money back, what will they earn on it, and what`s the risk that you`ll go broke and leave them with bupkiss. The other side of that same coin is that if you become successful, they`ll be your first choice for all your other financial needs.

What about family, relatives, and friends? Can they help at least get you some of the financing, or help you to appear more financially invested when you ask for more financing? Do you have an accountant who`s skilled at planning out startup capital?

As I understand it the reason why potential investors want to see that you’ve invested your own money first is twofold. First you believe in your business model enough to risk your own hard earned money, it’s always easy to lose someone else’s money. Second if you’ve already invested your own money before you go seeking financing these potential investors or loan sources have a working business to evaluate, what is your margin, how big is the market, what is your market share, what are your liabilities etc. Without the tangibles you may have a great idea, but that is all you have an idea. Most people don’t like to invest in ‘ideas’ they want to invest in proven business methods, but most importantly in the people behind the enterprise. If they can see that you took 10 bucks and turned it into 100 within a year, and the only reason you didn’t turn it into 1,000 was you didn’t have enough capital to turn your inventory fast enough, they are likely to invest/loan/risk their capital. Otherwise you are asking them to step into the abyss with nothing more than faith on your dream and abilities.

ElidS pretty much nailed it in the most succinct fashion I`ve seen in awhile. "Without the tangibles you may have a great idea, but that is all you have an idea." That says it all, but more importantly, the point about the only reason you didn`t grow $10 into $1,000 was you only had $4 and grew it into $400. Excellent analogy! Investors want something they can feed into the trend analysis machines. :-)

I don`t think that I can add anything new to financing than what has been said here.  My business partner (my sis!) and I went through the same thing.  We didnt` want to put up our life to take a risk, but in the end, that`s what we did; home equity loan and retirment savings.  If we don`t believe in ourselves and that we can make our business successful, how can we expect any future financiers, including Angel investors? 

And as Craig said, SCORE is great for some resources, but those men (and I say men because they`re all men in my area) have been out of the loop for years.  I think your research in your area of business is what`s going to be important for you. 

If you cannot finance yourself through a home equity loan and you`ve found that there is a market and have solid evidence that you can succeed, or at least a high level of probability that people will shop at your store, then put together your business plan and talk with your family and friends.  You`re bound to find someone that will support you if you have a solid business model and the opportunity for someone who supports you to make money. 

I know that it can be frustrating, but keep your chin up, make a list of all of your financing options, and eliminate all of them before you give up.  And even then, reevaluate and start again.  Don`t be afraid to approach your family and friends.  Maybe even consider bringing in a partner to split the costs and the work.  Retail is A LOT of work.   

Cheers.

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Tammy Graham, Founder & CEO, True Genius Apparel Company: fitting your personality; www.mytruegenius.com. "You must be the change you wish to see in the world."

Thank you for this very useful information everyone.  That is exactly what I was looking for!

I look forward to getting to know you all in the fourms.

MrsB73,

Thanks for asking this question...I`m sure there are many out there with the same frustrations, myself included.  This info was helpful to me as well...

It sounds like you have a great idea...Good luck and go forth!

Becky

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Becky Boyd
Alexandria, VA
rebeccalboyd@hotmail.com