Forums: Discussions for entrepreneurs and small business.

I am the mother of two children under 5, so I really need to be near home. I love having a home-based business, but my business is outgrowing our current house. (For those of you that don`t know, I make and sell a humorous line of seasoning blends, specifically for making party dips.) I talked to my husband and we are thinking about purchasing a house in a business-zone. It would either be:

a) an older home with an attached barn or garage that could be converted into a commercial kitchen and retail area. (That`s fairly popular here in NH.)

b) a multi-family where we could convert the downstairs area for the business and live upstairs. (Might be good since plumbing, wiring and walls would all be in place.)

c) a small house on land and we`d build a place for the business.

I believe this would benefit us in many ways. I could be with the kids more and they wouldn`t be cooped up in the corner of some warehouse. I`d be paying rent towards our own equity. I`d save on shipping since we`d be in a commercial area, and would also have pick up. Also, customers could actually come in and shop - which they can`t at my current house. I know that this will bring in a lot more money because people are always asking where my retail store is.

So, I guess my question is, what is the best way to finance something like this? I don`t think we can do it with just a mortgage based on our current income. My sales have steadily been increasing and having a retail space will definitely have an impact on sales. The mortgage broker probably won`t care about that, but the business lender would. Is there a way to get a mortgage for the space we`d use as a living area and a business loan for the space we`d use for the business? I`m not good with finance unfortunately. I`m great with creative stuff but I`m awful with numbers.

Also, do my reasons for moving to a business zone and paying toward my own house instead of to a landlord make sense? I haven`t had much time to research this yet because it`s something we just recently thought about. I`m sure there are things that I`m not thinking about.

Thanks so much!

I can`t tell you about the financing, but your reasoning does make sense.

I just wanted to say that I love your website, and I`ve been inspired to go buy a few dips ... YUMM!

Thank you!

Entreprenerd,
What you want to do before you venture into your new home with a retail store attached to it. Check with your cities ordinance (zoning). Some cities allow for you to have a business on a residential area as long as it`s not a mechanic shop or you are creating unwanted noise pollution.
Also, since you would be building a retail store you are creating foot traffic. I know in California it`s 1000 dollars per month for creating extra foot traffic or any traffic at all (you have to take parking into consideration). Imagine if your neighbor is coming home from work tired and there`s no parking on the street? He can shut you down or sue you.
Some cities won`t even give you a permit or license if it`s a Residential area.
What you may want to do is find a home in a business area ( main street).
That can decrease your liability and might be able to get a permit if it`s on a busy street.
I had trouble getting a permit when I was working out of my house until I told them I wasn`t going to create extra foot traffic since it`s an internet business.

So if saving money is what you are trying to do, check what the fee`s are to establish your busines on a residential street. If it`s worth it go for it, but if it`s not, you might be better off leasing space near by. It could be cheaper for you.

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Edgar Monroy
Web Developer / Owner / Consultant
When starting your own business the need to "know-how" is greater than money!
http://www.nuevolution.net

If it were me in your position I would opt for option C as I would want my work life somewhat separate.  I would get a nice 5 acre lot with a house in the rear of the lot and then build your store front at the front of the lot.  That way your kids can play freely and be somewhat separate from your work life.  Anyway just my 2 cents.

Nuevolution - I would definitely only buy a property in a designated business zone. (Also, we don`t have much street parking around here. Everyone has driveways and parking lots. I would say that on the average, homes here are on at least an acre or two.) My current home is strictly residential. I`m on a side street that has only residences. My current business is legal (I am licensed and inspected by the state), but I can`t have a sign or anything. I will definitely make sure that I would be allowed to have my business if we move, otherwise it wouldn`t be worth moving.

Hostclick - Thanks for the advice. In some ways that would be good, but from a parental standpoint, I think I`d rather have the house attached or close by. I`m open to anything however, and you bring up a good point.

It is great being able to work from home and for the time that it works, it can have many benefits. You have become wildly successful and need space to spread out and to grow. I see that you sell retail and wholesale...imagine what you could do with more space for creating and making orders, how a larger space would inspire you to grow larger and how you can open up shop in your local community. I really feel that you have created a great company with much value and I think a commercial loan specialist would be able to see this and work with the range of growth you are headed. A house with a seperate barn would be really neat for your company, or additional building. Meet with a commercial loan officer and a local commercial real estate professional and see what they could come up with. I have only been at SUN for a couple of months and you and your business definately stand out to me as not only a very successful buisness but also a very success and smart business women. Go ahead, go for it...You Deserve it. You are at that point, now see what your local professionals can do for you. :)Congrats on your continued Success!

Erin

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Our Goal Is Your Success!
Founder Girls with Goals

Wow, thanks Erin! That`s really nice of you. I think you`re right. I need to go talk to a bank. I have 3 choices right now. One of my best friend`s dad is manager of a credit union. She has talked to him and he is willing to work with me. Also, I belong to a different credit union that has great rates and I could talk to them. Also, I know the manager pretty well at my local bank down the street. That`s where my business checking account is. I don`t know if their rates would be as good as the credit union though. I think what I need to do first is talk to the Women`s Business Center here, or the SBA for some guidance. I also need to get my books in order. (Long story.)

Anyway, thanks for the nice compliments! You made my day.

You won`t know unless you ask. I believe that anyone looking at how you have grown will find a way for you. You have done the work and have a vision. Any local bank or sba ofice will see this and do whatever they can to help you grow!

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Our Goal Is Your Success!
Founder Girls with Goals

I hope so. Everyone says it`s so hard to finance a business, but luckily I have 2 years behind me to show the bank. I think that will make things easier than borrowing for a start up.

Thanks again!