View Full Version : business loan
02-03-2008, 06:34 PM
Steve P. brought up a great idea: a business loan.
If you guys were still in your first or second year, would you consider a loan to get the biz up to speed a little quicker, or just gradually re-invest?
I'm been going the re-invest route for safety, but is that too safe?
INTEGRA Bespoke Lighting
02-03-2008, 09:51 PM
With the state of the financial markets in the USA today, and a consumer credit crunch upon us, you might find it very difficult to find a small business loan with decent rates and terms. If you want to pursue this avenue, you had better be armed with one heck of a good business plan before you try. You had also best be looking for a lot of Do Ray Me. Most sources are not interested at lending 10K, 20K 30K etc at these relatively low interest rates... the interest barely covers the administration expenses on small loans. If you are looking for 500K or more then you might find some lenders, but what could you possibly need all that for in our line of work which is considered very low overhead.
I built my business the old school method... I started small, kept my FT job, invested 100% of profits back into the business until I simply had to make the shirt to Full Time... then I built the entire operation up with cash. Shop, Rig, Tools, Technology... it took some time but now things are humming along smoothly and the re-investment requirements are not nearly as onerous as the re-payment of a long term debt and interest. Given where the markets seem headed now, I am glad I was patient.
If you really need a source of credit Mike, I would suggest you attach a line of credit to your home (if you have equity) This will secure you a decent interest rate, can be locked in and most importantly you can structure it that you actually come out ahead in the long run. (You personally borrow the $ at say 7%... you then lend your business (you must be incorporated for this to work) the money it needs at say 10%.) Talk to your accountant.
02-03-2008, 10:00 PM
If you invested it wisely it could be a good move but then again I wouldnt be willing to risk my familys home for it. Like James we kept the FT (in our case the landscaping business) but have severly cut it back to where the FT job is now part time.
In your case mike your in the same boat as me. I would continue with your next season in maint and sink as much as you possibly can into the company. Maybe a website this month, Graphics on the truck in a few more months, catchy advertising another month and keep up with your education and persistance to be the best you possibly can. Often times when someone takes a business loan to grow their business they are not ready for the growth. You must must must make sure you have the infastructure and desire in place. Do NOT take a business loan if your just looking to turn more profit tmrw. If that was the case and you simply wanted to launch a big marketing plan then consider a short term loan. Your accountant can help you determine the best way for your situation.
02-04-2008, 02:08 AM
This can go either way. When we started we did get a business loan. It wasn't huge (over 50k but less than 100k). It all comes down to state of mind and business sense. It's not a bad way to go if you don't have the start up capital, but you also have to remember that this loan is now a huge part of your overhead. It needs to be payed every month...even if you had a bad month. The plus to a loan though is that it allows you to afford the more expensive expenses that a start up can incur...ie. advertising, truck lettering etc. We spent a ton on advertising our first year in business which we would not have been able to do without the loan. The greater the risk the higher the reward...however it can also break you if you don't have all your ducks in a row.
02-04-2008, 03:18 AM
For me I took out equip loans my 1st yr. Then I found that my needs changed after all that. I needed bigger or different equip. I got into different things. Like doing underground fiber work for a local college,picked up lighting. Now I have no idea what I want to do with the biz. For me one week i'm all for it the other week i'm bored with it.
INTEGRA Bespoke Lighting
02-04-2008, 09:43 AM
Yo Sleepyhead.... seriously, if you are bored with the lighting business for stetches of a week or more at a time, do us all a favour and drop it, sell it or otherwise get out of it. (No personal offense intended.)
Leave the creative, mind expanding, evocative, environment creating work to those who have a passion for it. Your clients, and all of our clients will be better off in the long run being served by those who have a zest for what they do.
I really think that it is important to find what you love to do and then do it. Once you have that figured out, things just flow, smiles grow and life is good.
02-04-2008, 11:39 AM
Do you never have second thoughts about what you are doing for a living?
02-04-2008, 11:52 AM
Sleepyhead, you got no spark in ya? Been there. Start with a blank tablet and a pen. List some changes you'd like to make in your life/sketch some models ideas/write some promises for change/or just draw some funny cartoons. Or skip my advice and go to starbucks and juice yourself up.
I'm just the opposite. I can't sleep. I'm going nuts over changes that are happening rapidly in lighting. As I sit hear my feet are banging the floor. Gotta run!!!
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