Business Question for the group

Greetings all,

First, let me thank you for your time, I'll try to be brief, but I'm not promising anything. :)

I have what I think is a semi-original idea for a side line business for myself that has the potentional to become a full time job. Unfortunately I have more ideas than cash at the present time. How does one go about attaining the neccesary revenues to start a business from scratch? Ideally I would like to find someone who has some discretionary funds that they would be willing to invest in my venture. Realizing that while there is no guarantee given, we could come to an agreement on a set percentage that they would have returned to them, upon which time our commitment to each other would be over. Am I dreaming? Is this too simple an idea? One person I have spoken to says that people are going to want to be buying a percentage of the business, but I do not want/need any partners, in my way of thinking I will be supplying 2/3 of the neccesary factors, the ideas and skills. The final third, the funds, should be self providing after the initial start up. Again, am I seeing this in too simple of a way?

Guess that's it, gang. Feel free to shoot my ideas full of holes, but I would prefer some constructive criticism on this matter. Either way, any and all input is greatly appreciated.

Regards, Jim C Roberts

P.S. Steve in Las Vegas or Lane in the PNW, you guys still hanging out here? Some reaccuring puter problems have kept me away for awhile, hope you are both doing well. JR

Reply to
Jim C Roberts
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Most venture capitalists will insist/demand that they own and control your business. You'll get what's left.

No personal experience, but have attended a few seminars on the subject.

Reply to
John Miller

"Jim C Roberts" wrote: (clip) we could come to an agreement on a set percentage that they would have returned to them, (clip) ^^^^^^^^^^^^^^^^ A set percentage of what? If you mean a set percentage of the money the other party invests, then you are just talking about a loan. If you mean a set percentage of the business revenue, you are asking the lender to take a greater risk, so the percentage would have to be higher. Also, you would have to make a very convincing case that you are going to succeed--the lender stands to lose his whole investment.

If you have a really good plan, you ought to be able to go to the bank and borrow some money.

Reply to
Leo Lichtman

We start a business with your ideas and skills and my money.

The business goes bust.

You still have your ideas and skills and I have...nothing.

Save the money, convert possessions to money, borrow the money but NEVER from relatives. Or a friend you value. Get a second FULL time job. You'll be working double time at your own business. May as well get used to it.

Everyone wants to own their own business but few want to invest the time, effort and sacrifice. Good luck to you.

--Andy Asberry recommends NewsGuy--

Reply to
Andy Asberry

From _their_ perspective they will be loaning you the money, and assuming most of the risk if the business goes bust -- so they'll want to have most of the business at the end.

You say you don't want or need partners -- but then you say you need the money. That sounds like needing partners to me.

I would suggest you do one of two things: One, try to go it your own with a home equity loan and living on rice & beans for a while while the business starts. Two, see if you can find someone with business expertise _and_ money -- just making the worlds best widget isn't going to help you manufacture it economically, or get it onto dealer's shelves.

Reply to
Tim Wescott

Reply to
Eide

There are lots of options, but they will vary somewhat with the amount of money you need to obtain. So you might start by giving us an idea of the amount of money you think you will need and what you are going to do with the money.

A small amount can be done on credit cards. Somewhat more could be done on a second mortgage. More than that is likely to end up with someone owning part of the business. But if most of the money is needed for tools, you might be able to buy them like most people buy a car. The title to the tools would not be yours until you pay back the loan.

We just need a little more information before we can come up with a good solution. We don't need to know exactly what the business is. But it would help to know if it is manufacturing a product, doing work for others, etc. And is the money going to be spent on anything that could be used as collateral. Or is it going into advertising, rent, etc.

Dan

Reply to
dcaster

Also try;

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Richard

Reply to
Art Van Dalay

Yah, Jim. I'm still here, but doing a lot of traveling. Bought two properties out of state posturing for full retirement, and busy with them.

I went through the venture capitalist thing when starting up my welding business. I even got an audience with Leonard Sam Shoen, the founder of U-Haul. I pitched him, and he refused. He remained a friend until his death.

Another "friend" was a international financier type who helped bring Coca-Cola into Russia. Then all their execs went missing, and they had to ransom them back. I was all good to go with him for $250,000 for expansion and then he asked if it mattered where the money came from. If, say, I read something negative in the paper about the company who loaned me the money. I made some lame excuse and got out of there.

Venture capitalists want different things. They want a bigger percentage than you will get. They want to install their people, usually a just-out-of-college know-nothing type who thinks he knows a lot because he just went to college. These people are to keep tabs on you, and get them out of their relatives hair. You will have to requisition paper clips and justify what you will use them for, and when you do use them. Some want a fast return, so they can reinvest their money. Hence high interest rates. Good for the lender, bad for the borrower. Some want it written so if the idea goes ballistic, you usually end up as a janitor/salesman rather than an exec.

People who lend such monies usually charge high rates, as they are unsecured. If you fail, there's not much to confiscate. And if you win, they want 1/3 for life rather than their original third plus their vig. I invest in first trust deeds on construction loans/property development. We only loan 60% of the market value of the property, so if they fall down, we own the property, and have made a quick 40%. Only one has failed in 12 years. Our yield is 12% to 25% with the money turning in less than a year.

Just about any way you go, you won't just find a good hearted person who is willing to give you a lot of money to get this thing off the ground. Unless you have a rich relative or something of the sort.

Don't want to piss on your parade, but warn you that all good things usually have hooks in them. If it's a great idea, you would be light years ahead to do everything you can by yourself, and if it is a true great idea/invention, some big company will come to you and make you an offer you can't refuse. You will know if you have a winner within three years, and probably a whole lot sooner than that. You will see a pattern early on, and probably identify a potential buyer. Or if you want to ride the horse until one of you dies, you can do that, too.

Be careful whatever you do, or you may end up losing your idea and working for someone you dislike.

Steve

Reply to
Steve B

If you read from a business perspective and pay attention to what the challenges are in each step of the way and which ones management focuses on, you might find this to be an interesting "cookbook" on how to start a successful business from scratch:

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Reply to
Speechless

Good to hear from you Steve, know what you mean about traveling, I started a new day job about 8 months ago and have done more traveling since than I ever have. Mostly around the SE, but they are talking about a trip to China, have to wait and see about that one.

Uhhh, I don't need any where near that much $$, I was thinking more along the line of $5,000-$10,000 to get started with this little project. I know I want to start small, build one, sell one if it comes to it. IF I could find the right person, (Someone with the proper skills in one of the mediums we would be using) I would be willing to entertain the idea of bringing them in as a partner, but I will be very picky.

These are the people I plan to stay faaaar away from, I have seen a few folks get just what you described from these types of folks, not gonna let it happen to me.

Guess that was a pretty naive idea, huh?

Not at all Steve, or any of the others who have been kind enough to reply, I sincerely thank you all for your input.

Not an original enough idea for all that, just trying to expand on an idea that I saw recently.

Been there, done that. I truly believe I would be more willing to walk away form it if it got to that point. Life is too short to work with or for stupid people anymore.

Thanks again to everyone who has replied, you have given me a few things to think about and some good sources of info. also.

Regards, Jim

PS Steve, drop me a line on the private side, when you get a chance, I might have a little more to discuss with you about this. JR

Reply to
Jim C Roberts

If I though I could start up a business that I could live of for that kind of money I would just borrow it, interest rates are not that high.

Business angles/venture capitalists base their strategy on investing in a number of projects and hoping that at least one pays of big time. Every one believes their project is a dead cert, but still many fail. For such a person to invest 10K with you he needs to get 50K back, in time, from either you or from one of the other guys they invest in.

Good luck

Peter

Reply to
Peter McLelland

So, economize a bit (cut expenses - take a vacation from cable TV, cook more at home [from scratch, not boxes] and eat less at restaurants, get movies from the library rather than at theaters, etc...) and/or take a second part time job (if you don't believe commentary about your part time business eating as much time as a full-time job working for others

- if you do, take another full-time job) and put away $500/month for 10 months (or $1000/month for 5, or $100/month for 50). Free and clear, no loans, no interest to pay, no paying back loans if things go belly up.

You probably can just wing $5k out on credit cards, but that's a high-interest-rate treadmill and trap (one late payment will get you a really high interest rate) you can easily avoid. If you somehow can't envision waiting and saving for a few months, then take out a home-equity loan - but consider the overall cost .vs. the "need" to go at this "right away". If you make "loan payments" to yourself (to save up money), you end up with a lot more money than if you make them to someone else.

If you don't own a home to take out a loan on, wait and save is the only sensible option, unless you have an expensive car/truck you can replace with a cheap car/truck and some cash. The fiscal discipline require to gather the initial funds will serve you well though the rest of the business. Savings are evidently out of fashion these days (from what I read in the news), but it can really be quite helpful to have an entire year's salary or more salted away in case of tough times, or small business ideas you'd like to fund, and that's before you consider what you should be saving for retirement, since money going into social security is probably not going to be coming back out...

If you are saving up for welding equipment, you can also (once you've saved part of the money so you have it in hand) consider needing less money to start by looking for used equipment to start. If the business makes money and you yearn for new equipment, the business can pay for it. If the business does not succeed you're out less money, and you can get started with less money in hand. This does assume that you can identify "good used" from "bad used" equipment (and that your starting figure involves new equipment at all).

As someone else said, find your local SCORE office and have a chat.

Reply to
Ecnerwal

"Peter McLelland" wrote

Every one

Anyone watch the "Inventor" program? Some of those people had the lamest things, and were ballistic when rejected.

I quit watching it when they narrowed it down to the final four. Sheesh, is it me, or did they pass up some really good things? I know everyone can't win, but what's up with that doll thing? I can think of several of the losers that were about two light years ahead of that particular invention.

I hope that the losing inventors were able to draw enough attention by exposure to their inventions to at least help them launch them. The dental flosser, the sandbag maker, the car seat guy, and many more had really good ideas. I am sure some company will pick up those, and many of the other losers. Or I hope so.

Steve

Reply to
Steve B

"Ecnerwal" wrote: (clip) If you make "loan payments" to yourself (to save up money), you end up with a lot more money than if you make them to someone else. ^^^^^^^^^^^^^^^^ Yeah, but you don't get the instant gratification.

Reply to
Leo Lichtman

When I started my wrought iron business as a side job, I went to the bank and got $2500 on a signature loan. That was in 1982. A new Millermatic 200 was $1200. A chop saw was about $60. Hand grinders about $50 each. Some various hand tools. I was up and running in a week. The money from the side jobs quickly paid off the loan with a low amount of interest, and I eventually ended up as a steel erection contractor. The first job was a gate for the banker!

Instant gratification it was not. But it was pretty darn fast.

Steve

Reply to
Steve B

--FWIW when it comes to raising capital the *last* folks to contact are the press, the media, etc. I did a test once to determine whether the media prefer silly or practical inventions. With the exception of CNN, all other networks prefer silly stuff. In other words they're after "infotainment" and informing or educating the audience is way down their list of priorities. --If you've got an idea that you think is worthy of development and in need of money you need to go straight to venture capital. Write a business proposal (take a class and learn how to do this right) and have at it.

Reply to
steamer

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Reply to
Bulletsnbrains

Jim C Roberts wrote: Ideally

This just in. The Sat. Wall Street Journal had an article in section B page 4 on a web site that provides forum for individual borrowers and lenders. The web address is Prosper.com. And it is kind of intriguing. If you wanted to borrow say $10,000, you would write up why you want to borrow it and give the max percentage you would pay ( say 12.5 % ) along with stuff so people could judge how good a risk you are. Prosper verifies your credit. Then people bid on loaning you the money in 50$ increments. So you might end up with fifty people loaning you the money. Some loaning as little as 50$ and some maybe much more. If enough people bid on loaning the money, those that bid the lowest interest rates will be the lenders. So you might not get a loan, or you might get it at less than 12.5% .Prosper collects the money and electronically transfers it to the lenders bank accounts. Loans are for three years and can be paid off early with no penalty. Worth checking out the web site.

Dan

Reply to
dcaster

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