Hey, everyone. Excited to be a part of the community. I searched the forums and couldn't find an answer to my question, so please assist me if you can.
We have a fire-hot product (blah-blah-blah) and have signed an agreement with a manufacturer. There has been interest on the part of distributors but no agreements have yet been signed.
In order to fund our first run of the product, which is a beverage, we need money. We've hired a company to help us secure funds. (I know, I know, but we're trying to get it popping sooner rather than later so...)
But this brings me to my question: Will a bank or an investor look unfavorably on our business model if none of the three principals plan on working full-time for the business? Our projected revenue for the New England area is quite high, and I feel a bank or an investor would say, "Wait, how can they expect to make $X.X mil without anyone working full-time?" even despite the details being delineated in the biz plan.
Does anyone have experience with sitting in front of a banker or investor and saying, "I'd like to borrow $150k+ and the principals will keep their day jobs"? If so, what was the reaction? If not, what did you do, and how did it work out? Did you request extra money to help fund the time spent making the business pop in the first year or two, or did you just work to the bone, doing two jobs at the same time?
Thanks a lot. And, yeah, I'm a noob. Hopefully, flaming isn't a part of the culture on here. lol
---Principal Parameter Group ParameterGroup.com
Yes - no one (banker or investor) will give you money if you are not fully dedicated to the business - why would they?
You might be able to tap friends and family - those that know you best - for the capital. They might understand your situation.
You could hire someone to be the full-time front man.
You could try alternative sources of capital - we list several on our site.
You could (all partners) try to get personal loans - not related to the business - and pool those funds for the capital your business needs.
Or, you could tap your retirement funds - create a corporation around your business then direct your retirements funds to invest in that business. Then, as the business takes off, take money out of the business and replace your retirement funds. Thus, no loan or investor as you become the investor.
If you won't personally risk your own time or personal money - then why would anyone else?
---Business Money Today
Small Business Loans & Start Up Loans
Investors and traditional lenders are quite different. To your question, an investor will be concerned about the issue of no one being "committed" to the success of the business. For example, I was asked by a friend to accompany him to a presentation from a biz that he was considering. There were several other potential investors in attendance. The presentation seemed to be going very well- until someone asked "When will you be dedicating full time to this business?" It was clear that none of the 4 founders intended to quit what they were doing and had never considered the question. The interest died right there.
Lenders look for different things and may see your continued "regular" incomes as a positive since it could improve your ability to service the loan. It will mean that each of you will have to sign a personal guarantee for the loan amount.
My observation would be that having no one dedicated to the business could be seen as an underestimation of what it takes to build a viable business from a standing start.
Good luck in your quest. If you wish to discuss your specific situation, feel free to drop me a PM or contact me directly.