Raising money for small business

A

agadele

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Hi All
I am at a bit of a cross roads with my business. Last year started a contract cleaning business, its been slow but we have now got in to our niche market and our reputation is spreading. The problem is that money is dwindling. of course the point of being in business is to make profit, but in our first year we had expenses of machinery, van, advertising ( a killer) etc. the cross roads is that I need to get an injectionon of money - what is best recommended? The bank I suppose, but just wondering what any of you guys did. thinking outside the box and all.
Also to add to it all, I was just offered a job from an previous employer with a salary of 65K. Its a nice easy option staring me in the face to.
My heart wants me to carry on on my own, but the money is my concern. Any advice?
Many thanks
Agnes
 
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How much sales have you generated, and what do you expect to generate over next 12/24 months?
Also how much are you looking for?
 
well I think I have been a bit of a slower learner re: where to get consistent work from, so I am moving our focus away from the type of customers we already have. I did up a business plan and what i thought we would make etc, but we will just break even this year. As I say its been slow. next year, I dont know how to forecast it honestly at this stage. Obviously if I was going to a bank I would be making different projections, however honestly i dont know, could be another year of breaking even, but I would certainly hope not,as we are definalty building the business up. i used savings to support me throughout the year.
 
Is it possible to take the salaried job and continue to run the business.? Perhaps, even getting someone else on a part-time basis to do what you did in the business?
 
Thats what Ive been thinking, but it would be hard running the two beside each other. Its definatly an option though. I am meeting with enterprise board next week, and possible additional funding.
How do others do it though? Surely not all small businesses are profitable from the start?
Many thanks
 
It is not unusual for a business to make a loss or just break even in the first year or two, I'd stick with it as there is nothing like working for yourself. Plus anyone I know who works for themselves are very comfortable after a few years in business and I mean very comfortable indeed.
Good luck with it.
 
agadele said:
well I think I have been a bit of a slower learner re: where to get consistent work from, so I am moving our focus away from the type of customers we already have. I did up a business plan and what i thought we would make etc, but we will just break even this year. As I say its been slow. next year, I dont know how to forecast it honestly at this stage. Obviously if I was going to a bank I would be making different projections, however honestly i dont know, could be another year of breaking even, but I would certainly hope not,as we are definalty building the business up. i used savings to support me throughout the year.
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Are you currently profitable (i.e. each month)?

If so, you're probably in pretty good shape, regardless of previous losses.

If not, is there any realistic prospect of getting to profitability? If there isn't, you should think seriously about stopping now.

If, on the other hand, there is a prospect of profitability in the relatively near term (say six months), either by cutting overheads (is advertsing really the most cost effective way of getting new business for example?), or preferably by increasing sales, then it makes sense to get cash injection to get you through.

It all comes down to having a business plan that is realistic and that you believe in. I'd be a bit concerned about your statement about making "different projections" for talking to a bank: you should have one plan that's as accurate as you can make it.

Whatever you do, don't run out of cash! It completely removes your ability to control events.

Best of luck!
 
Hi All
thanks very much for the responses. yeah, well we are just in profit, and I mean just by about 2K. I reckon another 6 months to 12 months would make a big difference to us. Its really my personal income that is causing the concern.
I know this sounds daft but as most businesses dont make a profit, how do people sort out their salary levels?
I have asked my accountant this but he thinks Im nuts to try and get a cleaning business going anyway.
many thanks again
 
I know this sounds daft but as most businesses dont make a profit, how do people sort out their salary levels?
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Shouldn't profit be calculated after salaries have been taken out? Salaries certainly are a business expense.

If you're not making enough money to pay yourself, then you're not really making a profit. To answer 'how do people sort out their salary', some business owners use 'family, friends and fools'. Others live on beans, or remortgage etc..

When you first set up a small company, the odds really are stacked against you. The revenue treat you like a criminal, entitlements go out the window, and you generally have no money. You really have to be insane. However, it's better than working for someone else IMHO :D
 
leghorn said:
Shouldn't profit be calculated after salaries have been taken out? Salaries certainly are a business expense.
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Yes, if you are trading from a Limited Company

No, if you are trading as a sole trader, as "salaries" are in fact drawings and no deduction is given against your profit - on which your annual tax is calculated.
 
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