# I need capital!!!!!



## ExecBldrs (Jul 25, 2012)

The hardest thing about starting a business w/ no money is that people who work for you need to get paid, but even getting a check for 50% down still doesn't allow me to pay the supplier and my subs or even my bills on time! Does anyone have any experience with investors? Is this a good route to go? Or is simply having a business partner with money a bad thing?!?!?


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## smalpierre (Jan 19, 2011)

Usually a really REALLY bad idea. Suck it up and get used to it for a while.


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## VinylHanger (Jul 14, 2011)

Most of us have started with no money. Do jobs you can afford and grow slowly. Also if you can't pay the bills and related costs of the job, you need to raise your prices. If the subs have done their work, the customer needs to pay for that part of the job and then you can pay them.

Each job should pay for itself. If you are doing insurance work or commercial work and have a long pay cycle, you need to have cash on hand. If you don't, get into a different line of construction.


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## Oconomowoc (Oct 13, 2011)

ExecBldrs said:


> The hardest thing about starting a business w/ no money is that people who work for you need to get paid, but even getting a check for 50% down still doesn't allow me to pay the supplier and my subs or even my bills on time! Does anyone have any experience with investors? Is this a good route to go? Or is simply having a business partner with money a bad thing?!?!?


You need to save up money somehow and I agree that smaller jobs is a good approach. 

If you wanted an investor for your business that's not hard to find, there's a ton of people with money just waiting to invest it. Finding them is hardly the problem.

The real problem is this; what are they investing in? Investing in anything requires risk management and there's a a very high risk in throwing money at a guy who can't save up to start a business. It's even more risky when it comes to a construction business.

You have to save up some money, that's the bottom line. If you had money would still want a partner? Hell no!

You want to own 100% of your business. Work a part time job if you have to.


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## jamestrd (Oct 26, 2008)

that's what credit lines are for...make a bank your partner.....if you really have to, use low interest CCs to fund and pay your bills entirely when paid..

and for your line of work, you may need more draws on your payments..set your schedule up differently so that you have cash flow streaming in constantly form the jobs..if your jobs are ling longer than a week, that payment schedule will not help you.


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## smalpierre (Jan 19, 2011)

Do you have net 30 accounts with your suppliers? A lot of decent size jobs can be done in 30 days. Pay off each job when the check clears, and pay the guys. You get what's left - should be enough to pay yourself, and have money left over - or why bother?


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## UALocal1Plumber (Jun 19, 2009)

A bank is never your partner. They're fair weather friends that only stay with you till you need them. Do not get in bed with a bank until you have LOTS of confidence in what you're doing. One wrong move and you can be wiped out overnight.

Keith


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## smalpierre (Jan 19, 2011)

UALocal1Plumber said:


> A bank is never your partner. They're fair weather friends that only stay with you till you need them. Do not get in bed with a bank until you have LOTS of confidence in what you're doing. One wrong move and you can be wiped out overnight.
> 
> Keith


Also watch out for call in clauses. Often there are clauses where they can call your loan at any time for no reason whatsoever. Usually they don't for unsecured loans since there's no collateral for them to steal, but they can still wipe you out.


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## Oconomowoc (Oct 13, 2011)

Banks make excellent partners, just not when you're broke and can't float a simple business. If I was a bank I wouldn't want that partnership. 

Companies that want to grow use banks all the time, it's a vital part of success. 

That said, a bank isn't what the OP needs.


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## Warren (Feb 19, 2005)

No investor wants to invest in a business where the owner is not also invested. If you don't have enough capital to cover some costs, you should probably put off starting a business.


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## Gary H (Dec 10, 2008)

I invest with Grant and Franklin. Two of my very best friends. I do work and they come to me. Sometimes never leaving for a long time. Other times they run away to someone else. But most times we hang tight together.


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## JT Wood (Dec 17, 2007)

Warren said:


> No investor wants to invest in a business where the owner is not also invested.



Wise words:thumbsup:


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## Rob1954 (Jun 22, 2010)

Doesn't sound like the OP has the credit, savings, or assets to be starting up a small business. Starting a business is a bit like gambling. You have to have some money to cover your bets and never bet more than you can afford to lose.


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## [email protected] (Aug 9, 2011)

Oconomowoc said:


> You need to save up money somehow and I agree that smaller jobs is a good approach.


I agree smaller jobs is probably the way to go. When I started I only had a bag of tools and was limited to a certain sized job. I was always worried about paying the bills and keeping my jobs running. What made it even harder is I dont use any credit. If I go out of business tomorrow then I owe no one else a dime. My business grows with my assets. Now the rewards are bigger and the risk id diminished.

Ive seen a lot of businesses fail when they get too big too quick. Growth is great but if you run a deficit business you will fail.


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## Oconomowoc (Oct 13, 2011)

[email protected] said:


> I agree smaller jobs is probably the way to go. When I started I only had a bag of tools and was limited to a certain sized job. I was always worried about paying the bills and keeping my jobs running. What made it even harder is I dont use any credit. If I go out of business tomorrow then I owe no one else a dime. My business grows with my assets. Now the rewards are bigger and the risk id diminished.
> 
> Ive seen a lot of businesses fail when they get too big too quick. Growth is great but if you run a deficit business you will fail.


Yeah I'm with you on that. At no point in the history of me being in business have I owed a single penny. I paid for my cube van with cash as well as the tools and inventory. I've heard studies about businesses taking 5 or so years to make money but I made money my first month and never looked back.

I had one issue and that was making sure my cost of materials was competitive. I solved that by having a meeting with my sales rep and told him if my cost multiple was the best available I would promise total loyalty and 100% of my product would come from him. The second thing I offered was to pay NOT using credit. Basically, I got a separate debit card exclusively for the wholesale house and they put it on file so when I order it gets deducted immediately and a bill is never sent. 

I've been told numerous times I'm a favorite customer because so many people are late on payments. They literally bend over backwards for me no matter what. I can go to bed tonight knowing I owe nothing to nobody and that's pretty comforting.

No stress.


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## [email protected] (Aug 9, 2011)

Oconomowoc said:


> I can go to bed tonight knowing I owe nothing to nobody and that's pretty comforting.
> 
> No stress.


Thats been my business model and so far its working. I dont want to be a part of the credit craze. Been down that road in my personal life and will never do that again.


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## UALocal1Plumber (Jun 19, 2009)

Oconomowoc said:


> Banks make excellent partners, just not when you're broke and can't float a simple business. If I was a bank I wouldn't want that partnership.
> 
> Companies that want to grow use banks all the time, it's a vital part of success.
> 
> That said, a bank isn't what the OP needs.


A bank is simply not a partner. It is a vendor. It sells you money at a rate that is based on a combination of market forces and government regulation, and its motive is profit. As soon as it becomes profitable to see you out of business, they will take that course of action.

No partner would do that.

Keith


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## Teddy Z (Jul 23, 2012)

*Holding Corporation*

OK, so if you have plenty of work and can show people that you have a good potential to earn an income and share a profit then you can use a holdings company as your avenue to build some capital. Go do a websearch on how they work. 

You will be opened up to people owning shares of your company and you will forever pay them a portion of your profit until you can buy them out. 

It's always best to pay everything with cash. In construction, you'll be getting paid by your owners late pretty much all the time. You have to be able to have enough cash to float your jobs and become your own bank. Also, write in your contracts that late payments will incur an interest fee for you having to play the role of the bank to float the job.


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## KAP (Feb 19, 2011)

Oconomowoc said:


> Yeah I'm with you on that. At no point in the history of me being in business have I owed a single penny. I paid for my cube van with cash as well as the tools and inventory. I've heard studies about businesses taking 5 or so years to make money but I made money my first month and never looked back.
> 
> I had one issue and that was making sure my cost of materials was competitive. I solved that by having a meeting with my sales rep and told him if my cost multiple was the best available I would promise total loyalty and 100% of my product would come from him. The second thing I offered was to pay NOT using credit. Basically, I got a separate debit card exclusively for the wholesale house and they put it on file so when I order it gets deducted immediately and a bill is never sent.
> 
> ...


ExecBldrs,

Cash is king... as a small business you wear many different hats. The admin hat is one that can eat up a lot of your time with billing and managing billing that could otherwise be used for more productive things, like marketing and job fulfillment. As far as using credit goes, all you need is one account to screw you and it can take a long time to recover, not to mention lost profits due to financing and late charges. 

Most guys confuse "profit" in a job with what they pay themselves. It is NOT. Your pay should already be included in your overhead. Profit is what you pay your company. Out of this, you develop over time cash reserves, an emergency fund, equipment purchase fund, real estate, taxes, etc... it also allows for visits by Mr. Murphy or overruns, miscalculations in estimate, etc.

To do this, you have to actually have a profit... you should be able to tell what your profit is going to be before you sign any paperwork. That number is to be protected at all costs... the reason for this is if you are able to maintain that number at the end of the job, that means everyone else, INCLUDING YOU, got paid... now you take that money and put it in a separate account. This is the beginning of your capital reserve and emergency fund. 

Been on both ends of the business (i.e. - credit and cash) and I can tell you that cash is the way to go... Vendors treat you better (they don't have to wait for their money) and give you better pricing most of the time, you have less stress, your admin hat got a lot less tighter, you manage cash flow instead of it managing you through robbing Peter to pay Paul cycles.

As far as investors go... investors expect to be paid a ROI... they become another line item in the quoting process. Instead, make YOUR BUSINESS that line item and provide yourself with a ROI for investing in your business. 

It takes time to build it up, but I can tell it is so worth it, but you would be taking time to find and attract investors anyway... There's a confidence that comes across to clients when you can say your company is debt free and you OWN all your equipment, vehicles, etc...

If you can't manage your personal credit, what makes you think you can manage your business credit? Or better put, if you can't manage your cash flow, why would an investor invest with you?

You want to work to the point where you have 6-12 month of capital reserves and 3 months of emergency fund. Depending on your success and management rate and operating expenses, this can take from months to a couple of years. But if you pay these dues, you will start to realize a ROI in your business ABOVE what you pay yourself. That is when you start to COMPOUND your success...

Best of luck... 8^)


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## Gary H (Dec 10, 2008)

Kap, your posts sure make alot of sense.:thumbsup: And even better they are easy to read:thumbup:


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