I need a second opinion on an idea, so here is my situation. I just opened my flea market based business last weekend. The first two days were really slow, though the entire market was complaining that it was below average for this time of year. My third day (Sunday) was much better, though still slower than my projections for the weekend. I have only 60 designs to begin with, though I want to add more.
Most of the designs I have currently stocked are aimed at younger folks, mostly college aged to mid-thirties. However, the market gets alot of older, mostly retired couples as well. I lost alot of sales to those couples I believe, and I think if I had designs to cater to them, my first two days would have been much better.
I am pretty sure stocking more designs will increase my sales. Also, Raceweek is coming up in 2 weeks, and we will be open every day, so that should hopefully mean more business.
Now the dilemma: I have sunk almost all of my cash on hand into just opening, and what I do have remaining, I need to save for my household bills. I Have maxed out the little bit of credit I do have as well.
I have a friend that has repeatedly told me that he would loan me the money to start my business. I haven't spoken to him lately, but I believe he would still help if I asked. When he asked me before (months ago) how much I thought I might need up front, he laughed at my amount and said, "is that all!?" So I'm sure the amount I need now would be trivial to him.
Hypothetically, I should be able to make the money back within the month, if things go well. But if they don't......I don't want to be negative, I am just not positive if I should borrow the money or not. I am doing this business full time now, and I need the income from the store, it isn't a matter of waiting for it to pick up, and like I said, I am sure I am in control of how much I am taking in. It is just a matter of having the stock to keep me going.
What would you guys do in my situation? And if you have any more questions to ask me, I would be glad to tell you anything that might help.
Anthony, I think you know where I stand on borrowing money.
But, if your "friend" considers it a small amount, they why do they need to lend it to you?
If they can't give it to you, maybe you could persuade them to invest it in your business.
That way you aren't worried about paying it back, should you not do as well as you think. If you make money, then great, pay them back. But if you don't, they know that they aren't owed anything because it was an investment.
I had considered that. I was wondering what would be the best approach to that, as far as their payback plan assuming everything works out. I know that is something I will have to discuss with him, I am just trying to protect my own interests, of course. I know he probably WON'T ask what's in it for him, but that is still ground that would have to be covered.
I originally thought perhaps I could pay him a reasonable premium back, almost as interest, in a way. Nothing outlandish of course, possibly the current going bankrate (or a bit lower.)
Alot of folks think any type of debt for biz is bad, but alot of times, it's just a reality to get going.
Donald Trump discusses how he keeps banks he deals with happy. If he uses them, there must be a method to his madness. He certainly doesn't need to, so that speaks volumes to me. Anyway, this thread is about opinions on borrowing, and I guess my opinion is, if you have to borrow, keep your business life seperate from your personal life and borrow from a bank or other lending institution.
There was another thread a while back on credit cards. I view credit cards as short term loans with no approval needed. I pay my business card off at the end of each month with the money I have made from sales of the stock that is on that card. I usually have 4 to 5 weeks to turn the stock around, if you can work in short cycles, it can work.
If you are confident you will get the sales for your stock during bike week, this is a viable solution for you. Credit can work very hard for you if you use it in a smart way. Anthony, from your post it seems you're situation looks like you can turn your inventory over in one week. It's just an idea to think about. After the first month, I had profit to roll over into the next stock purchase and the money was already in hand to pay the next bill. It can work out nicely.
I wouldn't toss out the idea of the credit card loan if you can convert the sales in time. I hope you are able to find the solution that works for you. You're a hard working smart cookie. I'm sorry if my suggestions aren't good b/c they are bank and CC, but I am only trying to help.... they certainly helped me, and I never paid one cent in interest. Best wishes.
Last edited by Girlzndollz; January 29th, 2008 at 02:13 PM.
My concern with this is that sometimes borrowing money from friends. (or lending money to them) is a real good way to lose a friend.. so many thing can happen ..
I agree with both of yo, to an extent, but Kelly, there is one problem to using a credit card: I can't get one. If I could I wouldn't have asked this question. I am young, I have two credit cards, one of which is secured. I have applied for, and been denied for many cards and I am over that for now. It is frustrating, and I am working up my credit so that this is not an issue in the future, but for now, I am limited in my borrowing power.
I am not concerned really about borrowing from a friend, despite the horror stories. We are more than capable of keeping the business and personal ends seperate.
That would be my only concern, is how would effect the friendship if things dont work out right. Oh and my other concern would be what do you do if you dont sell enough product and cant pay it back ? I think that is what would be a problem with it being a friend that you are borrowing from.
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Always do right; this will gratify some people and astonish the rest. ~~~Mark Twain BobbieLee
That's why I'm asking the question, I suppose. Wether I take the money from a bank or a friend, there will be consequences if it doesn't work out. Granted those consequences would be different depending on where the money comes from, but either way I don't want the plan not to work.
Let me look at it in a different light for a second. I wouldn't be expected to pay it all back in one month, that would be foolish. Well, even if my sales in February are only so-so, I should be able to retain enough cash to pay at least a quarter of the loan, possibly half. So within two months of taking the loan, I should have paid at least half of it back, and I might have even paid it back fully.
Right now, from where I'm standing it seems the only foolish thing I could do is NOT take the loan, regardless of where the money comes from. The increase in stock will positively equal increased sales. Even if it doesn't pay itself off within the first month, it should take a chunk out of the total, at the very least.
Then Greg's post regarding the direction of borrowing from a friend is an excellent proposition. Since you're going that way, guess it's better to focus on working that out the best way possible. It can work out, it doesn't always have to end up badly.
You posts brings up a good point I hadn't realized before. It's hard enough to start a biz, but if you are younger, you have the double whamy of a short credit history. It's different when your old - like me - but you gotta be old for the benefit.
Borrowing Money: Need An Opinion 
I know he probably WON'T ask what's in it for him, but that is still ground that would have to be covered. 
It's different when your old - like me - but you gotta be old for the benefit.
