Funding for Going it Alone

CapedCrusader

Hi folks,

I work in the PAYE sector and have a family. I've grown a business in my spare time and it is now reaching the point that it needs my full attention.

Problem is, it's a retail business and most of my sales will come over the Christmas period.

If I'm to leave my current job, I will need my company to pay me a wage. The overall profits of the business will support this, but my projected cash flow won't in the short term. So to make it work, I will need to borrow.

Would this be normal for a retail business, or would they build up cash reserves to manage the seasonality of the business?

Will a bank loan to me to cover stock and wage costs?

In these credit crunch days - does anyone have any advice on how to make a stong case?

I can show sales history, sales history, cash flow projections and a business plan. Is there something I'm missing?

Would be grateful for any advice.

CC

BarryM3

Hi CC,

Is this a bricks and mortar shop or an online business?

CapedCrusader

BarryM3 wrote: »

Hi CC,

Is this a bricks and mortar shop or an online business?

Hi CC

It's an online business

kenst

CapedCrusader wrote: »

Hi folks,

I work in the PAYE sector and have a family. I've grown a business in my spare time and it is now reaching the point that it needs my full attention.

Problem is, it's a retail business and most of my sales will come over the Christmas period.

If I'm to leave my current job, I will need my company to pay me a wage. The overall profits of the business will support this, but my projected cash flow won't in the short term. So to make it work, I will need to borrow.

Would this be normal for a retail business, or would they build up cash reserves to manage the seasonality of the business?

Will a bank loan to me to cover stock and wage costs?

In these credit crunch days - does anyone have any advice on how to make a stong case?

I can show sales history, sales history, cash flow projections and a business plan. Is there something I'm missing?

Would be grateful for any advice.

CC

Check out this:

http://www.enterprise-ireland.com/Grow/Finance/Seed_Capital_Scheme.htm

I think there is another scheme that allows you to pay yourself up to 38k a year from your last three years taxes, maybe it's this scheme not sure.

Thumbprint

If you can, Hold on to the PAYE job.

Speaking as someone that went out on my own and now has a young family.
I learned the hard way.

As an employee you can get assistance....
Dentist, Doctor, Unemployment Benefit

That is gone once you go out on your own.

Getting a loan to cover you will just cripple you, you cant be 100% sure that this christmas you will make the money you are expecting to make.

Especially with the way things are at the moment. Try to keep the 2 jobs going..... and save up. at least you and your family will have more security

Bandara

CapedCrusader wrote: »

Hi folks,

I work in the PAYE sector and have a family. I've grown a business in my spare time and it is now reaching the point that it needs my full attention.

Problem is, it's a retail business and most of my sales will come over the Christmas period.

If I'm to leave my current job, I will need my company to pay me a wage. The overall profits of the business will support this, but my projected cash flow won't in the short term. So to make it work, I will need to borrow.

Would this be normal for a retail business, or would they build up cash reserves to manage the seasonality of the business?

Will a bank loan to me to cover stock and wage costs?

In these credit crunch days - does anyone have any advice on how to make a stong case?

I can show sales history, sales history, cash flow projections and a business plan. Is there something I'm missing?

Would be grateful for any advice.

CC

Jesus Christ, don't tell the bank you want a loan for stock or wages.

DubTony

I thought I posted on this one yesterday. (Obviously not )

Anyway, as far as borrowing money to pay the wages is concerned, it's a big no-no. Governments do this (Irish governments do anyway). It's a recipe for disaster. My rule when borrowing is simple. What I'm borrowing for must pay for itself and more or I don't bother.

The simplest thing to so is cut, cut, cut. Get rid of the chaff if you have any. (Although I get the impression you're a one man operation) If you can't make cuts, you should be happy to sit on what you've got until things either get better for your business or you develop it to a point where it can always support you.

Many bricks and mortar retailers have seasonal difficulties. The trick is in identifying when these are. Unfortunately, there are some who see cash flow as a guide to how well their business is doing, and milk it for all it's worth, leaving nothing for the leaner periods of the year. During these lean periods it's a good idea to let casual staff go, or if only full-time and permanent part-time staff are employed, they should be taking holidays and their regular hours either not covered or covered by a salaried person (the owner) so the cost on the company is negligible.

It's all about juggling. My advice would be sit tight until you've developed your business to a point where it can adequately support you.