How much do you ask for?

maeintexasmaeintexas Posts: 4subscriber
edited June 2008 in Startup Funding
When you go for a loan - how much do you ask for? Do you ask for just the start-up amount, or should you also include 6 months to a year of expenses? Should you figure up start-up and 6 months to a year operations costs to determine how much cash you need to come up with as equity, or do you just figure up start-up? This is where I get confused...

Comments

  • robertjrobertj Tampa Bay, FloridaPosts: 0subscriber Member
    To find the amount of capital required I would
    1 Calculate the amount needed to open the doors (start up costs)
    2. Add to that the amount needed to maintain the business until it will support itself from the revenue.
    3. Add 3-6 months expenses as a safety margin.
     If you are able to borrow that amount and are comfortable with the debt, then move ahead. If not then you will need to consider other ways to acquire the capital you need.
     
  • maeintexasmaeintexas Posts: 4subscriber
    Here is the question of the year: how do you determine how much you need to maintain until the business supports itself? I`m going into a retail/service business. I`m planning heavy marketing and lots of events to draw people in, but how do I determine sales/registration numbers? (At least a reasonable number for projections....)
  • robertjrobertj Tampa Bay, FloridaPosts: 0subscriber Member
    When we work with client`s on this, we start with some assumptions - which are based upon some foundation of facts.
    For example, the average conversion rate for a web site is around 1/2% to 2%
    If one intends to use something outside that range- one should have a strong reason.
  • StartUpSmartStartUpSmart Posts: 0subscriber
    Hi,
     
    My advice: talk to people who are in the business already. Getting advice from start-up consultants is great but nothing beats talking with somebody who`s been there. People like to help others so you shouldn`t have any issues finding some solid resources. Ask them the same questions you asked above.
     
    Additionally, you may be able to get these individuals to be on your advisory board. They should go in your business plan. Banks and other funders want to know you have a solid advisory team and access to resources and help.
     
    Good luck!
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