Forums: Discussions for entrepreneurs and small business.

OK,

I have semi-bright idea last week. While I am looking for startup capital and can tap out credit cards and savings I am sure I can get the money without an investor.  That being said, I do not want to pull from my savings and/or credit cards unless I really need to. I think getting a business loan would suffice.  Now I am young and credit is still young and I think I would have a hard time obtaining a loan for 100k as I already have a mortgage and 2 car notes I think my debt ratio might be a little risky even though I make great money currently.

I am also not a great salesman.  I am more the technical guy behind the scenes.

I currently work for a sizeable Technology Service Provider and one of our top sales managers (which average 4-6mill annually in sales) is a great businessman. He is a real estate investor, owns several small businesses and has been featured several times in the local papers as a Young Black Entrepreneur.

He is in his mid thirties and he has told me about minority ran businesses and grants etc and I am thinking about talking with him about the potentials of my business and bringing him on as partner.  We will then be able to register the business as a MINORITY business and will be accessible to a lot more had I not taken this route.

In the past he and I have collaborated about software I could write and he sell etc.  Nothing has ever come of that, we have just talked.  He and I get a long great and I think this would be a great step into launching my company.

What are your thoughts? I think with his sales knowledge and my abilities in the technology side of the house along with his mature credit and my new credit I could get the loan easily or grants being a minority business.

 

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Come check me out at www.bytenram.com. Your one stop shop for all your technology needs!

www.flipitbig.com - Your resource to efficient Real Estate Investing

Gerald,

Having people with skills /experience that compliment yours is not only a big help in building a business - it`s an "asset" when seeking funding.

In order for a business to be classified as "disadvantaged" (what you call a minority business) it must be at least 51% owned by the disadvantaged person(s).

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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

Robert,

Thank you for your responses.  I haven`t had my laptop on me so I have been unable to reply to your last email.

I should have a response back for you by this evening.

Also, There throws the disadvantaged idea out the window.  I don`t think I want to give 51% to someone.  Maybe 49%.

:)

Thank you for all of your help.

My meeting with SCORE is on the 23rd of this Month.  Thanks to your email I was able to meet with my CPA earlier than expected and are in the process of many changes.  I should have the final draft back this Friday.

You can check out SCORE at http://www.score.org.

 

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Come check me out at www.bytenram.com. Your one stop shop for all your technology needs!

www.flipitbig.com - Your resource to efficient Real Estate Investing

I have been following this thread with great interest because I am considering starting up a business as well and find a great deal of insight in many threads in this forum.

I have notice a question that was asked that I`m not sure if I read an answer to it.

How long does an investor wait before he/she expects a return on their investment into a business?

roblue,

In the equity category, that would depend upon the situation, but by way of  general info - typical time frames for Venture capital firms is 5 years (with a max of 7). 

Remember the longer the investor waits for their results - the greater the risk (actual and perceived) and therefore the larger the expected return.

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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

Thank you for responding Robert.  Based on your response, if I am lucky enough to convince someone to provide the business capital I need for my start up, the longer I wait to present this investor with a return the larger the percentage of the return.

In that case, I like worse case scenarios help with the preparation process, a seven year period should expect what type of percentage on the invested return?

Roblue,

This will vary according to the specifics of the situation - which effect the actual and perceived risk. However, Venture Capital Firms (those that invest other peoples money) will usually want to "see" the potential for a ROI of 30-40% per year, with a shot at 50%.

 

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

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

Never heard the 4 f`s rule before. Thanks for sharing.

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Credit Card Counseling / Small Business Owner

OK, I am thinking 100k is a very hard amount to raise. 

I have looked at the figures and I can borrow 25k to get my retail store open.  Now this is a big gamble as I would not have any cushion if business is slow the first month (which I do not anticipate). 

With my salary I can sustain this for a short period if sales are not good.  My thought is I should take the risk...borrow the 25k and get the store open.  I mean if it doesn’t make it at 25k and getting the store open would it of made it with 100k to last a year?

What are your thoughts?  Would this be worth doing just to get my store open and making some money?

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Come check me out at www.bytenram.com. Your one stop shop for all your technology needs!

www.flipitbig.com - Your resource to efficient Real Estate Investing

Generally speaking, retail stores take some time to gain revenue momentum so you are putting more pressure for quick results. If you will be reducing the budget for marketing & promoting your store - that would also increase the risk.

Have you considered some test promotions to get people primed for your store opening?

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

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