business idea - loan and advice

youngmummy

hi all, im not sure if i have posted in the right place
I am thinking about my future plans and myself and my partner have decided we want to set up our own business in a few years. i am 18 at the moment and by july this year our loan will be cleared but we are going to start saving from febuary. My question is if anyone knows anywhere that offer financial help towards business' as i havent heard of any. In 5 years time we hope to have more of a stable income and to be honest i dont think a bank will let me have a loan even if i did have a considerable amount of savings due too my age. Any adice would be much apriciated. I have a great business plan to expand a business that is currently up for sale, with a net profit of £100,000 and an anual turn over of £200,000-£500,000. It has a lease for a minimum of 10 years. For sale (the lease deposit and premises) for £99,000 but the plan i have would expand it futher .
Any advie would be much appriciated. I dont really want too walk into the bank for them too tell me too 'carry on dreaming'.

Thankyou x

somethingcorporate

There are sharks everywhere in business and the figures of the one you are looking to buy makes it sound like something doesn't ring true.

Proceed with absolute caution! If I owned that business I would bring in a general manager on 35-40k and still take a good living from it. So why are they selling such a decent business for so little money?

chalkie99

First thing:

we want to set up our own business in a few years

and then you go on to describe a business which is up for sale now :question:

Secondly,

If the business is for sale there is a reason for that and, very often, not the reason the seller claims.

Thirdly,

net profit of £100,000 and an anual turn over of £200,000-£500,000.

:question:

How can you have a profit figure from such a wildly varying turnover? Doesn't make any sense.

---

If, by financial help, you mean grants then it is highly unlikely you will get anywhere and it is inconceivable you will get anything at all without putting up a substantial proportion as your own money.

At 18 it sounds like you won't have much work experience, especially judging by your username, and it seems you are trying to run before you can walk.

Sorry for the negativity.

paddyrg

I totally get you! I was pretty entrepreneurial through school, always making a few extra quid and spotting opportunities no one else saw. And there is no reason why at 19 you can't own a business turning over a half-mil a year. But I would strongly suggest that you do that with a business you build up from scratch yourselves, and here's why...

18 is a great age, you feel invincible and like you now have all human knowledge in your grasp - so a brilliant time to start a business unencumbered by self-doubt and cynicism. And there is a lot to learn - basic business skills like how tax works, spreadsheeting and planning, costing, bargaining, having employees, marketing and promotion, etc. These are things you learn by doing, so do them. And do them with a few grand at risk as opposed to a few hundred grand! Learn to be wary of some offers, some people prey on business owners.

Now, as for the opportunity before you right now - what is it? If it is a 'self-employed opportunity selling Acai products with the potential to earn £500k/yr' type of company steer WAAAAAAAYYYYY clear. In fact keep well away from most business models that limits your choice of suppliers (aloe vera, tied pubs, etc - franchising may be different, but you need a lot of experience in the industry before considering your own franchise of anything), or any business where you need to recruit people beneath you to make any profit (they're all pyramid schemes ultimately, just with different clothes to sneak around one or more laws). And please be VERY careful buying another business - why is it for sale in the first place? If the owner is making £100k/yr clear profit after costs, it is a very successful business, so why sell? Is he too old and wants to retire? Sick? Bored? Or can he see future profits about to crash and is cashing in before it is too late? You need to study his books, do full due diligence, and make your own assessment if the business is healthy without the current owner's contacts and industry knowledge. But if you have no experience in the industry, you won't be in a good position to appraise his figures.

But a friend of mine started 'doing up' VW Beetles and Kamper vans 20-odd years back, and now owns probably the biggest parts manufacturer/supplier in that market niche, travelling the world doing deals, and rebuilding a house with an acre of 'pond' in the garden. It can totally be done, and there's no reason you can't do it - but get your experience and know your trade/market well and build it up, the money will follow. That's capitalism.

youngmummy

chalkie99 wrote: »

At 18 it sounds like you won't have much work experience, especially judging by your username, and it seems you are trying to run before you can walk.

Sorry for the negativity.

thanks for everyones replys.(my username)-can i jus say on my behalf i hav worked since i was 13
at 13 till 15 i did a paper round (hardly anythink but it was a job so i didnt ever ask my mum and dad for money for friends and familys birthday and xmas or for clothes, make up ect.
at 15 i worked in a restrants kitchen as a dishwasher also
at 15 as well as working at a childrens nursery/preschool till i was nearly 17, also worked throughout pregnancy. ive now took time out too do a buisness management course and hope to go onto university as well as complete 6 part time (full qualidfication) beauty and holistic therepy courses.

it is a hair and beauty salon i wont too set up but with a slight diffrence as it will also have childcare facilities. the one i have looked at atm has a part of the salon that is currently not used with would be suitable for this. sorry i didnt explain very well, if we couldnt get a loan we would be waiting a few years before setting up. the reson for selling is the owner wants to move abroad for retirement and hasnt got a family member intrested in running the buisness.

jonesMUFCforever

You don't need £100k to set up a hair salon - just a bike to get from one client house to the next where they already have childcare facilities ie a television set in most cases !

I won't charge you a penny for saving you all this money!

paddyrg

That's all very promising that you've worked for a few years already - although owning a business is a very different deal from working. The owner off to retire in the sun sounds very alluring! I would be wary of her profit figures though - most salons hire the facilities to freelance practitioners and take about £7/session, in that case she would have 57 treatments/day booked in. Maybe she has, but that would mean 8 practitioners busy full time, and maintaining the space to accommodate that. Of course she probably does some treatments herself which will help, but it does sound a very high indeed. And if that £100k figure is profit on £200k turnover, those figures double!

barbarawright

Have you done any market research on how much your clients will be prepared to pay to have their children looked after in a separate room for half an hour? Will this extra cover the wages of the qualified nursery nurse or whoever you would need to run the creche which would add £30k or so your running costs.

To be honest, I doubt premises for salons are hard to find - every hgh street has empty shops.

opinions4u

I think you'd need a significant personal stake (50% plus), a track record in the same industry as an employee and some sort of personal guarantee to the bank to honour any business debts.

At that stage, they may consider financing the business. Your age and lack of track record is heavily against you though.

I actually think a few years of being a self-employed sole trader in the manner described by jonesMUFC above, taking the opportunity to prove your worth to a bank and build up some business savings is an excellent way forwards.

One other consideration. Getting away from the kids for an hour or two of relaxation and chat in the salon may be something that the average punter wants. Having the kids in the next room may not be quite far enough away for some mums!

I admire an enterprising mind and I'm not trying to pour cold water on the idea. As a male member of the folically challenged community my expertise is certainly not in ladies' hairdressing.

My advice is to work hard, save hard and enojoy the challenges and rewards that it brings. Best of luck.