PDA

View Full Version : Any suggestions? - Need capital



no_time_to_sleep
06-28-2006, 05:00 AM
I have a small business that has been in operation for about 6 months. I have about 7,000 dollars in gross sales per month. I offer a product that currently costs me $24.00 and I sell it for $30.00. This price is pretty fixed due to other competition.

I found out I can purchase a crate of this product from China for $50,000. This amount equates to 18.00 per item (substantial savings). At my current rate it would take me about 1.5 years to sell the entire inventory. I do not know much about loans and getting capital (started the business with $300 ) so any suggestions you may have is appreciated. I did a few calculations and it looks like a 2 year loan even at 20% would save me 9000 per year. But where do I get a loan from? Or maybe my calculations are wrong?

I applied for a business/personal loan from my local bank, but as I expected I was denied as I do not have any equity.

What are my options?

Thanks in advance!

fredkawig
01-16-2014, 10:12 PM
Unless you are sure enough to pursue buying products from China at $50,000. I think you should continue with your small business first for you to gain capital, it's not really easy to switch from a small business scale to a huge one. If you can borrow money from relatives, that would be nice. You should make sure your computations are correct and you should also consider the quality or perish-ability of the goods you are selling as this would impact your total sales.

delusional
01-17-2014, 04:49 AM
Unless you are sure enough to pursue buying products from China at $50,000. I think you should continue with your small business first for you to gain capital, it's not really easy to switch from a small business scale to a huge one. If you can borrow money from relatives, that would be nice. You should make sure your computations are correct and you should also consider the quality or perish-ability of the goods you are selling as this would impact your total sales.

I completely agree. You should also be aware that that 50k doesn't get the product to you. You'll pay import taxes, shipping and handling, maybe even processing, ...
Try to build up some capital (the margin on the product already seems quite low but as you mentioned this has to do with competition so nothing you can do about that).
Has someone negotiated the price of 50k? I'm sure you can get the same for 40k, maybe 35k if you find the right guy to do the bargaining.
Import from China isn't as simple as everyone believes. You need someone who speaks Chinese and knows how to market works in China in order the get the right deal because else you're still paying the "Western" price for the product.

oregano
01-19-2014, 08:18 AM
I agree that it could be very risky to borrow money to buy $50,000 worth of product from China when your sales volume isn't that great, your margins are low (and could still be relatively low even at the reduced pricing) and competition is high in your market. Especially if the 50k is an fob price as a previous poster mentioned. And have you thought about the lifespan of this product - is it something that might go out of fashion or become technologically dated within the next year or 18 months? A lot of products from China may be cheap and plentiful now, but as soon as the next thing comes along nobody will want them any more. And the producers move on to the next fad item very quickly there too.

And I second the person who suggested shopping around and also bargaining with the help of someone who speaks the local language and knows how to deal with Chinese manufacturers. There is always a Western price and a local price, very true!

crimsonghost747
01-19-2014, 06:14 PM
So you started your business with $300 and now, after 6 months you're ready to invest $50,000? That is quite a large step you are planning.

As the others have already said, make sure that the total costs after everything is still profitable. Just the import taxes are already going to make a big cut into the profitability you gain by ordering this from China. If I were in your situation I'd try to look for smaller quantities of said product from China and test it out with that before even thinking of spending $50k.

And to answer the original topic: If banks won't give you money you will have to get it from other people. Relatives are a choice but can make things really tricky if things don't work out. Try to find a website where individuals borrow money for each other, they do exist but the % you'll be paying is significantly higher.

CliffLife
01-20-2014, 11:55 AM
Continue in the direction you're currently at. It's working for you so far. Now you're trying to increase revenue? Have you considered selling or offering another product in the same area of your niche to your consumers? Do you market it online? If you're one product is not bringing in enough revenue as of yet, look for another product that compliments that one so you have some other means of incoming coming in. Then slowly work on building up that product like you did the previous one. Then you can consider purchasing from other sources, ie. China, to increase revenues.

rastasnake
01-20-2014, 03:26 PM
I have to agree other people on this thread that spending $50,000 is quite too much too spend for such a small business. I suggest gaining some extra stating money so you wouldn't have to get a $9,000 loan. You should also start getting some smaller quantities of product and start advertising so that you can get the upper over your competitors.

diprod
01-21-2014, 07:51 AM
If you can't avail a loan, I guess you could try raising funds using some crowdfunding online. I'm talking about sites like Indiegogo. Your other option is to have an angel investor.

owesem75
01-21-2014, 08:15 AM
You can also try selling on consignment. But this require a very close relationship with your supplier so they would trust you with their product. This way, you can request the quantity of items you need and payment based on the items sold. All unsold items can be returned provided they are kept on original packaging. You can also try to negotiate with them for a better deal. You can learn more about selling on consignment from various websites to know more about the terms, conditions, and managing inventories.

On the other hand, you must increase your point-of-sale locations/showrooms to increase sales. Good luck to your business.

wahmbrenda
01-21-2014, 12:34 PM
This may not be something you want to consider right now but have you ever thought about setting up an affiliate program? You could have other people doing the selling for you and thus make more money. This might help with your need for capital.

novasparker
01-27-2014, 10:32 AM
Here's my question to you...if it's going to take you 1.5 years to offload the products you are wanting to purchase, it will cost you quite a bit more than your initial investment of $50,000 in terms of interest on the loan you want to take out. With the added carrying cost of the loan, will the purchase actually net you the savings you are thinking it will? For example, let's say that you want to buy something in China that costs $1 because everywhere local sells it for $2. You take out a loan for $100 to buy up a bunch of it, which costs you $150 by the time you pay it off in 1.5 years. This means that your product that you bought in China acutally cost you $250 (the $100 loan and then $150 in interest= $250 total for the purchase, divide that by 100 items and you get $2.50 per unit). Crude math, but see what I am saying? Does it make sense to go into long term debt to buy products when it's going to take you a long time to pay them off? Usually not.

pahagwl
02-14-2014, 01:57 AM
I would suggest you to look at the option of getting a venture capital. Venture Capitalists are people who invest in up and coming businesses with a view of earning good returns when the business grows in size. While making the initial investment, they might not ask you for a share of profit but they will only invest if they believe in your business idea. They also look as to the prospects of the business in terms of it survival and profitability in the long run. If you are able to sell your idea to them, you can get capital easily without any initial riders.

fillidave
05-31-2018, 06:01 PM
In my opinion the best place to look for new capital would be a small business loan. A good place to start would be this article: http://b7y.us/SmlBizLoansHow2INC

speeduser
12-23-2020, 01:08 AM
You can approach a lot of institutions to provide your needs. It is simply one of the best things to actually have. - Paul Savramis (http://wikiland.net/paul-savramis)

CapitalBoost
02-10-2021, 10:43 AM
The best way for applying a business loan is to apply from a non-financial lender. The Traditional lenders like banks, continue to focus on lower-risk, large firms that meet their benchmark figures for criteria such as profitability. But now, many small businesses are approaching alternative money lenders for easier, quicker financing for their fast-paced operating plans. This new generation of lenders have streamlined the borrowing process immensely. It is now possible for businesses to qualify for loans in just a couple of days. Contrast this with the weeks and months required earlier.

If still looking any business loan, take a look at these different type of loans - https://capitalboost.com.au/small-business-loans and apply online.

raviseo120
02-10-2021, 10:41 PM
Thanks for sharing with us