Bankrupt but setting up new business

bigandy1314

Hi all, I’m after some advice, my girlfriend recently went bankrupt and the bankruptcy status (I’m sure there’s an official phrase but I confess I don’t know it) ends on September 30th. She wants to set up her own small business but I’m concerned that she’ll struggle to get support from the banks. I’m happy to invest money into the project, currently c£5,000 which is more than enough to get her renting a space and get her the things she needs, however, I’m realistic enough to realise it isn’t enough to last her more than a few months.
Does anyone know of any grants that are available for new businesses and if she would still be considered given her financial past. Equally, I would assume banks won’t touch her with a barge pole for loans, are there any exceptions to this?
Grateful for your reading time, Andy.

Paddy2eyes

If your initial investment is sufficient to get her business up and running, what shortfall in funding is a loan needed for? How long will it be before the business is self sufficient? Make sure you do a realistic business plan for everyone's sake to see if the business is viable.

paulwf

What type of business is it OP? The more info we have the better the replies you'll get.

COOLTRIKERCHICK

In all honestly.... the government and local authorities are cutting back on costs etc, so havent got money to give to starts up businesses etc like they used to...

In reality, I dont think banks will lend the money... might even have a problem opening up a business account...

So basically your girlfriend will have to try and get loans from family etc or raise the money by selling personal items... and hope the business can make a profit to pay herself AND re-pay back the money borrowed from the family and yourself..

Is there anyway the business could be run on a part time basis along side a full/part time job, while it is getting off the ground...so at least that way it is not putting an extra strain on the business of paying a wage in the begining...

bigandy1314

Thanks for your messages all, sorry Paul, not sure what OP is? “What type of business is it OP?”
The business is in the beauty sector, it'll be a salon for massage, aroma therapy and specialist treatments. As suggested, we've explored the option of opening it and my good lady (Amanda) also working part time, which is feasible given a lot of people prefer this kind of treatments either in the morning or evening before/after work. We estimate this would bring in £200 per month.
She’s currently using savings and investments from outside banks and loans of circa £4,000, renting premises on £500 per month but as almost all of the equipment ready to install, the only main investment is on products, which depending on the quality can differ in costs, estimate of £800 initial cost.
Currently she has 10 clients who would be happy to come to a salon a month, on average they provide £50 income per treatment, so she has a base already set up, the next stage is attracting more interest and expanding the base so the salon can become self sufficient. We think that it would take 6 months to get an established complete client base with initial costs in marketing/flyers and introduction deals.
The question on the bank is to see how much, if anything, we could get to not have the pressure of borrowing from family as well as getting a business account set up, though I’m a bit more relaxed about setting up a business account in my name if it becomes difficult.
I’ve just posted a separate note on business plans but any of you know where to find a good example of a business plan or tips for presenting one?

chalkie99

bigandy1314 wrote: »

not sure what OP is? “What type of business is it OP?”

That's you!

OP = Original Poster , the person who started the thread.

chalkie99

Am I reading this correctly?

She is recently bankrupt and before being discharged she is using savings, investments and loans to rent premises and buy equipment?

The premises are £500 per month? Does this include business rates, water rates, heating, lighting, insurances, commercial waste collection, etc?

Projected income £500 per month which only covers rent and a bad credit history. I can't see a bank being interested.

COOLTRIKERCHICK

chalkie99 wrote: »

Am I reading this correctly?

She is recently bankrupt and before being discharged she is using savings, investments and loans to rent premises and buy equipment?

The premises are £500 per month? Does this include business rates, water rates, heating, lighting, insurances, commercial waste collection, etc?

Projected income £500 per month which only covers rent and a bad credit history. I can't see a bank being interested.

I was just thinking that too.

I dont know if its just my rule of thumb:rotfl:, but if your rent is £500 per month, you can say your over heads will be roughly about that too.

I should imagine heating costs, electric etc will be quite high too, as who would want a massage in a cold room..

So I would estimate true running costs to be approx £1000 - to £1200 per calender month.. this does not cover the cost of buying stock etc

Also even though she has a client base now... doesnt mean she will be running at full cpacity in 6 months, some of her exisitng clients may lose their jobs... I honestly still think, things are going to get worse before they get better, and i am sure the luxury of a massage will not be on the top of the list to keep doing if you lose your job, or wages are cut back.

I have had to make some very difficult decisions over hte last few days.. we have an opt out cluse on our lease, and if we want to take advantage of it we need to give notice next month...our business has no room at the moment for a quiet time, so i am down-grading cutting my costs etc, so in the event things go quiet,, i am not left up the creek with out a paddle...

Suarez

Can she not do it mobile for a year or so and build up a client base?

Errata

Any potential investor would want to see a solid business plan covering not only income streams and other capital investment but start up costs and projections for the first couple of years. Real projections based on real research, not finger in the air 'I think the wind is blowing that way'.
Has she drawn up a business plan? I wouldn't even lend myself £5k without being able to crawl all over one armed with a fine tooth comb.

paulwf

Suarez wrote: »

Can she not do it mobile for a year or so and build up a client base?

A good option, another possibility is renting a room in a salon or therapy practice. There are so many ways this idea can be trialled at low cost and low risk that I think it would be daft to jump in the deep end and open a salon.

Any investor will literally be ten times more interested in investing if you have a year of working mobile or renting a room under your belt.