Start up capital for new business

Jobseeeker

You may guess by my username I have been out of work for a while with no job prospects on the horizon. Im currently volunteering

Anyway, the obvious solution is to start my own business, I had an idea for a business (well its been a dream since i was young) and have found out there is one in my area for sale. Unfortunately this would involve buying the whole premises.

I have no money at all, zilch, although I do own a flat with only a small mortgage left.

What are my options for raising start up capital? Would a bank take a chance on someone who's been unemployed for over a year? Will this make me look like im of bad character? Would need to raise about £200k:(

Savvy_Sue

Sorry, but there's no point beating about the bush, you have no chance of borrowing that amount of money unless you can put a considerable % in yourself.

Being unemployed or not isn't going to make any difference. It won't make you seem like you're of bad character, but in any case it's not your character banks care about, it's your ability to repay any loans, and of that you / your business have no track record.

Do the premises have accommodation included? How much equity do you have in the flat? You can tell where I'm going with this, but it's a long shot.

Apart from the premises, what would your start up costs be? Do you HAVE to have premises? Or could you start 'on the cheap' from home and see if it 'works'?

rageagainstessays

Do you have any generous rich friends or rich parents/siblings?
Money generates Money and well you don't seem to have any money apart from the equity in your flat.
In order to release that equity, you'd have to sell and if the business fails you'd end up being homeless- is all of this worth the risk?
What were your previous job occupations? Are you sure that you could manage the business once you've purchased it?

I'm only 18 so none of this is probably right, its just what popped into my head.

Jobseeeker

yeah sorry should have said the premises includes a small cottage so I would be living there. My flat has over £100k equity in it so I could sell it but don't know how easy that would be just now

I've seen the accounts of the business just now and has been making a good profit for 10 years but the owners are old and haven't gone down the route of facebook/twitter etc doesnt even have a website so I feel i could generate a much bigger profit than they have been

paddyrg

If they haven't built an online business, could you set up independently servicing the online side without the need for premises?

Savvy_Sue

Jobseeeker wrote: »

yeah sorry should have said the premises includes a small cottage so I would be living there. My flat has over £100k equity in it so I could sell it but don't know how easy that would be just now

And are the current biz owners currently living in the cottage, and do they want to move?

Jobseeeker wrote: »

I've seen the accounts of the business just now and has been making a good profit for 10 years but the owners are old and haven't gone down the route of facebook/twitter etc doesnt even have a website so I feel i could generate a much bigger profit than they have been

Until you've had an accountant look at those figures in a really quite forensic way, you have no idea if what you've seen is any reflection of what the business is worth, and what its potential actually is.

I'm just wondering if there's any mileage in seeing if they will let you 'buy into the business' in some way. They're probably saying that they want to retire which is the only reason they're considering selling and it's a fantastic money making opportunity, hence worth 200k. But maybe they know the profits are actually going down year on year, and that massive investment is needed to make it more profitable.

paddy's suggestion is also a good one (as always). If you want to give us a rough clue as the kind of business, we may be able to make other suggestions. We may also direct some more cold water in your direction, but we mean well ...

Onwards_and_upwards

Last year we looked at buying a business which came with premises. The best offer we got from a bank was 70% of the valuation of the building, but nothing towards the price of the business itself. Most banks offered us 60% LTV only. This was on the strength of a very detailed business plan, looking at our personal income and expenditure and looking at the accounts of the business (even though they weren't contributing to the purchase of the business).

mehera

Find a business that does not require so much money to start up!

The banks wouldnt pee on you if you was on fire . . ..

Jobseeeker

Savvy_Sue wrote: »

And are the current biz owners currently living in the cottage, and do they want to move?

Until you've had an accountant look at those figures in a really quite forensic way, you have no idea if what you've seen is any reflection of what the business is worth, and what its potential actually is.

I'm just wondering if there's any mileage in seeing if they will let you 'buy into the business' in some way. They're probably saying that they want to retire which is the only reason they're considering selling and it's a fantastic money making opportunity, hence worth 200k. But maybe they know the profits are actually going down year on year, and that massive investment is needed to make it more profitable.

paddy's suggestion is also a good one (as always). If you want to give us a rough clue as the kind of business, we may be able to make other suggestions. We may also direct some more cold water in your direction, but we mean well ...

yeah they have been looked over by an accountant. The current owners are retiring and moving away so selling the whole thing. The business is not worth 200k the majority of that money is in fact the cottage itself and the land.

The business is a cat hotel (yes I am a crazy cat lady). I live in a flat just now so couldnt start this where i live and this place already has the large cat houses and license

you're all right that i probably don't have a hope of getting this money together but it just seems like such a good opportunity and its a chance for a different way of life (i previously worked up to 70 hours a week in a very stressful job)

shmeeko69

Jobseeeker wrote: »

You may guess by my username I have been out of work for a while with no job prospects on the horizon. Im currently volunteering

Anyway, the obvious solution is to start my own business, I had an idea for a business (well its been a dream since i was young) and have found out there is one in my area for sale. Unfortunately this would involve buying the whole premises.

I have no money at all, zilch, although I do own a flat with only a small mortgage left.

What are my options for raising start up capital? Would a bank take a chance on someone who's been unemployed for over a year? Will this make me look like im of bad character? Would need to raise about £200k:(

You'd have absolutely no chance in getting money from any high street lender, as they've really tightened up after 2008 and all their business advisers and managers now have a default answer of NO unless your name's Richard Branson or Alan Sugar.

If you've been unemployed for over a year and you need to raise £200k then, you have to rethink what you want to do, as this is a crazy amount of money for any small bricks and mortar business and especially in the current economic climate.

Sadly, I think you need to change your thinking and be more realistic as to what you want to do and forget this idea.

All the best

paddyrg

Alas, cat hotel online/by post - I can see there being problems ;-)