Start up business funding advice needed

Chuzzle

HI

I'm looking at starting up a business in takeaway catering (toasted sandwiches) I have no savings to put into this, do I approach the banks and get a loan of £25,000 to start up (need to buy equipment) or do I get everything on HP agreement from each seperate company I purchase from or do I try a business angel?

I would really appreciate all thoughts and comments on this. I am looking to continue you in my current full time employment for at least the first 12 months so that mortgage etc can be paid.

motorguy

You will really really struggle to get £25K for a startup business from your bank. From their perspective, their is a huge risk of the business folding and them not getting their money back. And banks dont do risks. Also, how much of your own money are you prepared to risk if you're expecting the bank to lend you £25K?

Secondly, what equipment is needed that will total £25,000 to make toasted sandwiches? If you took £1 of the profit of every toasted sandwich you sold, you'd need to sell probably 30,000 sandwiches just to get that loan and interest paid off. If you're going to do this on a part time basis its going to take a very very long time.

Are you planning on leasing a unit or operate from a Van?

richt71

I'd look up your local bussinesslink. They are a government funded organisation that can talk through your plan and advise of any government loans or grants and the best way to pitch your idea to the banks. However I agree with the OP that I think i's highly unlikely the banks will lend you £25K withou a cash imput from yourself particularly at the moment.

bandraoi

If you don't have £25K or any equipment, what have you got?

Have you a contract to sell toasted sandwiches?
Have you contacts to extend your business?
Have you a venue to assemble/make them?
Have you cold storage to store them?
Have you experience in the food industry?
Have you qualifications in the food industry?

Chuzzle

The 25K is to purchase a kitted out trailer(12K), toasting ovens(7K) and upgrade my car(6K) to something big enough to tow the trailer - would trade my current vehicle in.
I've tried my local Business link but have not had much success from them - they either don't return my calls or send me stuff in the post not related to catering (building services seems to be what they think I am doing!!).
I didn't think that a bank would be that willing at the mo, ho-hum will have to have a re think.

Chuzzle

Bandraoi - I've got a provisional booking on a couple of weekend markets locally, I've had an offer of Mon-Fri on an industrial estate, although I'm not looking to do that straight away as I've already said I will continue with my current job to see if this is a goer or not, apart from that no to all your other questions. Doesn't look too hopeful does it.

motorguy

Ruthibe73 wrote: »

Bandraoi - I've got a provisional booking on a couple of weekend markets locally, I've had an offer of Mon-Fri on an industrial estate, although I'm not looking to do that straight away as I've already said I will continue with my current job to see if this is a goer or not, apart from that no to all your other questions. Doesn't look too hopeful does it.

I think you need to be very careful trying to gather up £25000 of debt for a business you dont know will make money. If it doesnt work out, that shiney new trailer might only be worth 6K, the ovens £1000, and the car upgrade lost in depreciation, and you could still have £25000 of debt.

Any opportunities to buy a second hand pre equipped small trailer? There are quite a few second hand units on ebay. I'd imagine there and exchange and mart etc would be good starting points.

Your car would have to be very small not to tow even a reasonably sized trailer, and why do you need to spend £6000 'upgrading'? Even if you have a 1.1 litre fiesta worth £1000, you could sell it and buy a £1000 2.0litre peugeot 406 that will do the job. Or what about asking a friend to tow you to and from your local market at the weekend for a few weeks to see how it goes?

Chuzzle

Hi Pgilc1

Thanks for your input, the thing is this business venture is to employ me, husband and mum - yeah I know you're all rolling your eyes up to the heavens and thinking I'm living in cloud cuckoo land! lol. So a small trailer isn't on the cards as they want us to work together at the same time. Therefore we ned aslightly larger vehicle in order to be able to tow this trailer.

I've looked into 2nd hand trailers, but they all seem to come laiden with bits that we don't want - like deep fat fryers and cookers. I suppose we could rip the bits out we don't want and then sell them on Ebay or the like to get some funding back.

Hmm, the more I read everyone's thoughts the more I'm thinking this isn't that achievable at the mo.

I did wonder about a secured loan on my mum's house - she has no savings to speak of but her home is fully paid up so no mortgage on it or anything. Not sure how she'd feel about that though. She doesn't have a full time job (seasonal fruit picker).

I really do appreciate everyone's thoughts on this - even if I do sound a bit far fetched at times!

bandraoi

Have you sat down and worked out the numbers?
Personally I'd do it over one year, allowing for working every weekend.

How much will a days use of the van cost you - in cleaning, fuel, maintenance, trips to buy supplies etc.
How much does making a toastie cost you?
How much will you sell a toastie for?
How many toasties will you sell per day.
How many hours of time will a day in the van selling be, this isn't just selling time but the maintenance, fuelling, getting there, cashing up etc. time (pay yourselves a set amount per hour (eg £5)
How much will the van be worth at the end of year one?
How much will the interest on the loan cost you?

If you can demonstrate that the numbers add up, it'll be much easier to get financing.

Chuzzle

I have got a business plan professionally done and printed out, and the company I've contacted about getting the toasty oven from claims a toasted sandwich costs 35p to make and sells for £2-£3 each and on eof their ovens makes 180 toasties in an hour!!

So in theory if we work 9 - 3 saturday and sunday thats a max of 1080 sandwiches (GULP!) costing £378 to make and £2700 if sold at £2.50 each (average prive of a burger/hotdog round here)

All the other figures have been estimated in the business plan.

Mark7799

Ruthibe73 wrote: »

I have got a business plan professionally done and printed out, and the company I've contacted about getting the toasty oven from claims a toasted sandwich costs 35p to make and sells for £2-£3 each and on eof their ovens makes 180 toasties in an hour!!

So in theory if we work 9 - 3 saturday and sunday thats a max of 1080 sandwiches (GULP!) costing £378 to make and £2700 if sold at £2.50 each (average prive of a burger/hotdog round here)

All the other figures have been estimated in the business plan.

Sorry, I think there's a flaw in your figures.
You're assuming you will sell 180 toasties per hour and you're assuming there will be sufficient attendance at the various venues to create this demand.

Visit some of the places you plan to sell at. Look at the traffic (foot and car) passing through THEN gauge how many you are likely to sell.

Don't forget the risk of overbuying ingredients (will bad weather reduce the number of people around?)

Is other food being sold there already?

I think you need to do a lot more research.