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A while back on SBN I posted a thread on wanting to start my own business, and needed a lot of basic info. Well, since then my bro and I have developed a solid business plan, start-up expense list, and a powerful advertising campaign. We're all set to go talk to a bank, but there's where we're stuck now: we have absolutely no collateral or equity. Nothing as far as a down payment for the huge loan we're gonna need. (500k - 1mil) We've looked into Venture Capitalists, but they only want to invest in big-money software companies. My business won't make much, but it would fill a HUGE need in the music scene here. Our possible next step is contacting major industry companies in the area like Mackie and Guitar Center. We'll pimp their name and products for some financial backing.

I feel like such a fish out of water here.... (well, not here, but you get the point) Does anyone have any ideas on a next step? Something we might not have thought of yet?
 

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Change your pitch for starters. Why should anyone loan money like that to a business that will not make much? Bad risk. If this is going to fill a hole in the music business, you need to figure out how it can make money.

Look for the outline of a basic business plan on the internet--the SBA may be a starting point. The plan should include forecasted financial statements which include notes outlining the significant assumptions used in calculating your numbers.
 

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Good on 2 God on 1
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synthesist said:
*finds street corner*

*shakes ass*


"Get your thrills for only a Mill!"

:D :D
LMAO! That ain't right!
 

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Bet_Winner said:
Change your pitch for starters. Why should anyone loan money like that to a business that will not make much? Bad risk. If this is going to fill a hole in the music business, you need to figure out how it can make money.
Couldn't have said it better myself. One of the questions the SBA asked me when I was working with them was, "how do you plan to finance. What is your stragety to talk to banks about loans and such?"

I sold myself to them. Tell them what you are going to do and WHY it will make a difference. How much its needed, how you plan to get business, etc. I pretty much max'ed out 2 of my CC's... (over 15k) of my own personal money to start it. I did this over a 3 month period working from my house, and had my CC's paid OFF in those 3 months while keeping an inventory at my house. I hadn't "made" money, but I had gotten it off the ground, and not LOST money. I have inventory which in my mind is positive cash flow. They saw that, and that I *was* making it work, and had no doubts to float me a check.

10 more years,... and I'm retiring. :) At 35. :biggrin
 

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biz

Check with some community agencies... like the sba or maybe the local voc-tec or univ. Somewhere there will be a small group of advisors... retired businessmen who are volunteering time to help out beginners. They would be an excellent source for assistance. Good Luck!:D If you are a vet, check with the va. I know they have resources there.
 

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rainmaker said:
A while back on SBN I posted a thread on wanting to start my own business, and needed a lot of basic info. Well, since then my bro and I have developed a solid business plan, start-up expense list, and a powerful advertising campaign. We're all set to go talk to a bank, but there's where we're stuck now: we have absolutely no collateral or equity. Nothing as far as a down payment for the huge loan we're gonna need. (500k - 1mil) We've looked into Venture Capitalists, but they only want to invest in big-money software companies. My business won't make much, but it would fill a HUGE need in the music scene here. Our possible next step is contacting major industry companies in the area like Mackie and Guitar Center. We'll pimp their name and products for some financial backing.

I feel like such a fish out of water here.... (well, not here, but you get the point) Does anyone have any ideas on a next step? Something we might not have thought of yet?
one problem you may encounter and will need to rebutt when the the SBA asks: whats to stop competition from another company such as yours from doing what you do once they see theres a market for whatever it is your going to be doing. why would you fill the nich better and keep your market share. the market you suddenly make will breed competition. look as cell phones. what and idea.. could whom ever thoght those up keep the market to themselves they would be richer than B.G. of microsoft. Barriers of entry is the term. Your market seems to have a significant barrier and thats in your favor... 1/2 to $1 mill start up fee. no barriers, anyone can steal your market. Lots of real estate appraisers in my area, but my firm offers fair prices, if not on the high side. BUT, my customers have become accustomed to quick professional service, thus im busier than ever..why would you do your thing better than someone else when they try to enter your market.

love the avitar.. seems to fit your style. sounds like you got some "moxy"... good luck with the venture.
 

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Miscellaneous ramblings:

It does take 3-5 years for a business to "make it".
80% fail trying.

My first year, earned $10k short of cost of operating.
2nd year, about even.
Lotta mac-n-cheese 'til things got going. (storebrand - 6 for a buck.)

People say, "Your own boss? Set your hours, and take vacations."
My experience: Work 60-75 hrs/week, no vacations for years, pay yourself last - after taxes, employees, vendors, answer to 2 dozen "bosses."


Sounds like you've got a great idea , for a niche. Be careful of the big fish eating you.

When Desert Storm was over, several buddies and I, got this harebrained idea to sell technology products to rebuild Kuwait.
Got bids from vendors for large orders and delivery schedules. Got financing from investors, buyers' promises, and we all put everything we owned into it. Spent thousands on long distance to Kuwait.

Long story short, IBM mowed us down, as we approached closing.
We did all the research and legwork, and they gulped it all in less than a blink.

Be careful.
 

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Discussion Starter #9
Thanks for the replies everybody. Sheeeesh.....the further we delve into this, the more impossible it seems. All is not lost though, I scouraged the B&N here and grabbed some books on acquiring capital. It may be best to do some homework there first before we throw ourselves out into the unknown.

This may take some time.

ThrottleBastard: Dang. So they just came along and took over? Did they buy you out?

melk-man: Well-heeded advice. Believe me, we're wondering why there isn't any business like this here. Maybe it is too expensive, or not cost-effective. You'd think after the grunge thing, everyone and thier mom would've had this idea. :confused And thanks for the avatar compliment. The only time I have to work on Photoshop is enough to make those. The beveling-thing has been done to death, but it works great in the Apocalypse skin.
 

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We figured one of the promised buyers, got his gang together, and with our numbers and plans, cut a deal with the big dogs.

We did everything, and got nothing. All money lost, but was an adventure, if not a lesson.

It's the big thieves hanging little ones, out there.

However, America is unique, because only here, can two guys meet, shake hands, build a factory, and deliver a product.

In Europe, it's "What is your background? Did you go to Oxford? Do you know how to build a widget?"

If you feel it in your bones, go for it!

You may get bloodied or killed, but hey, we all die anyways.

Chin up!
 

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ThrottleBastard said:
Miscellaneous ramblings:

It does take 3-5 years for a business to "make it".
80% fail trying.

My first year, earned $10k short of cost of operating.
2nd year, about even.
Lotta mac-n-cheese 'til things got going. (storebrand - 6 for a buck.)

People say, "Your own boss? Set your hours, and take vacations."
My experience: Work 60-75 hrs/week, no vacations for years, pay yourself last - after taxes, employees, vendors, answer to 2 dozen "bosses."


Sounds like you've got a great idea , for a niche. Be careful of the big fish eating you.

When Desert Storm was over, several buddies and I, got this harebrained idea to sell technology products to rebuild Kuwait.
Got bids from vendors for large orders and delivery schedules. Got financing from investors, buyers' promises, and we all put everything we owned into it. Spent thousands on long distance to Kuwait.

Long story short, IBM mowed us down, as we approached closing.
We did all the research and legwork, and they gulped it all in less than a blink.

Be careful.
what a story, ending sucks. but im sure it happens alot. would love to hear about some new stuff you or others are working out. (promise- i won't sell the info:D )
 

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I've been self-employed since Reagan was president, so I think I can comment here.

Money - you've already spent the little you had. Now you want to approach institutions, cap in hand, with nothing but ideas and enthusiasm to bargain with.

Reality check: even government funded agencies like the SBA won't lend you money unless you have some form of collateral to secure the debt. You can approach the banks, provided you don't mind wasting your time talking to people who typically require liquid or near-liquid assets (real estate) as security. Banks don't make unsecured loans to individuals, 'cause their portfolios are already chock full of non-performing loans made to 3rd world countries.

Only exception to the above (I know this from experience) is if the business is minority or woman owned (MBE or WBE). This puts you in a special needs category, where the rules don't mean squat and you just need your warm body to sign the paperwork. And if you don't pay the funds back, it's "Oh well..." :rolleyes

You need to take your business model and find alternative sources of capital. Family, friends, friends of friends, etc. You'll have to beg, cajole, plead and offer huge returns, because for the risk they're taking with your company, they expect it. Me and my partner once borrowed $20k. Six weeks later we paid the money back - $27k.

Forget the VC people. Before they invest a nickel in your business they'll want majority control of the stock. Others just want thousands of dollars to re-do your business plan, promising to hook you up with big monied investors. It's all a crock of shiite, so watch out.

Yeah, I'm being negative here, just so your enthusiasm doesn't get the best of you. There ARE ways to find and get money, but it's not always easy. Always remember, though, the squeaky wheel is the one that gets greased. Read the sig line. Good luck to you.
 

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Just make SURE you have a competitive advantage over your competitors (or in your case your future competitors).

And you don't necessarily need the 1/2 to 1 mil. I know you're probably very excited at the moment with your new venture but try to keep a very grounded head. You can dream big later but concentrate on getting your business off the ground first.

I'd give you some first hand experience since I just started a distribution company 16 months ago but it's too long to type. Feel free to pm me if you want. Best of luck to you.
 
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