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We got a cracking business idea that every person (high street and niche) we've discussed with has agreed will work, agreed that the numbers and forecasts are solid, but refuse to invest unless we can match them £ for £, because thems the rules. Sadly we cant get that far 
They've even said that if we can get going they'd be happy to come on board after a year and allow us to refinance at 75% LTV, which really pisses me off.
Anyhow, what other options do we have to find around £500,000 for a business that can reliably generate c£65k pa gross before finance costs?
They've even said that if we can get going they'd be happy to come on board after a year and allow us to refinance at 75% LTV, which really pisses me off.
Anyhow, what other options do we have to find around £500,000 for a business that can reliably generate c£65k pa gross before finance costs?
mondeoman said:
what other options do we have to find around £500,000 for a business that can reliably generate c£65k pa gross before finance costs?
If you haven’t already, you could: remortgage own property; use own savings; release equity from any other high value items you may own (car, bike, watch, art etc); family; and friends.mondeoman said:
We got a cracking business idea ...
Anyhow, what other options do we have to find around £500,000 for a business that can reliably generate c£65k pa gross before finance costs?
You don't know it will 'reliably' do anything, as it's only an idea at present. And there are lots of less risky opportunities to make £65k than throwing half a mil down a brand new and untested hole.Anyhow, what other options do we have to find around £500,000 for a business that can reliably generate c£65k pa gross before finance costs?
Start marketing, and selling. Refund people if necessary. But being able to show that 10/100/1000 people actually bought your widget is a different proposition to your paper projections.
Then reduce the start up cost and find some money yourself, somewhere. Most investors are going to expect plenty of your own skin in the game first.
The £500k is used to buy land, not just "thrown away", set up costs are minimal (<£20k) running costs are minimal, no staff required.
I rounded the number up a bit - we've got £70k to put in (all viable assets liquidated, including pension), need £390k, which gives a 16% return: the £65k pa goes to the investor as interest and capital repayment and I've got £2500 a month to put in as well to make sure that the investor is protected.
Similar ventures are fully booked 6-8 weeks in advance, so its a proven business but there is currently no local competition.
Its a short term investment to give us trading history before we go back to the high street, or maybe even stay with the original investors - high street banks really dont like businesses in my experience.
I rounded the number up a bit - we've got £70k to put in (all viable assets liquidated, including pension), need £390k, which gives a 16% return: the £65k pa goes to the investor as interest and capital repayment and I've got £2500 a month to put in as well to make sure that the investor is protected.
Similar ventures are fully booked 6-8 weeks in advance, so its a proven business but there is currently no local competition.
Its a short term investment to give us trading history before we go back to the high street, or maybe even stay with the original investors - high street banks really dont like businesses in my experience.
Edited by mondeoman on Sunday 2nd June 10:53
What will the business do to the value of the land? Is the use of the land restricted by planning? Is the range of potential land uses versatile in case the overlying business is not to goer you envisaged?
Do you expect the business to own the land or the investor who buys it? Why would they buy it as part your business rather than buying it and leasing it to your business? If the business had to pay commercial rates to lease the land, would it still make £65k per annum?
Do you expect the business to own the land or the investor who buys it? Why would they buy it as part your business rather than buying it and leasing it to your business? If the business had to pay commercial rates to lease the land, would it still make £65k per annum?
janesmith1950 said:
What will the business do to the value of the land? Is the use of the land restricted by planning? Is the range of potential land uses versatile in case the overlying business is not to goer you envisaged?
Do you expect the business to own the land or the investor who buys it? Why would they buy it as part your business rather than buying it and leasing it to your business? If the business had to pay commercial rates to lease the land, would it still make £65k per annum?
Planning is required, but proposed use is aligned to local planning rules and future requirements, and no investment taken until planning permission achieved. Do you expect the business to own the land or the investor who buys it? Why would they buy it as part your business rather than buying it and leasing it to your business? If the business had to pay commercial rates to lease the land, would it still make £65k per annum?
Business owns the land, why would you want it any other way? rental is £150/acre/annum, the £65k would reduce to £59k, so why would the lender accept just £6k pa when they can have £65k, make 16% on capital invested and then in 2-3 years move onto another investment..
If the business doesn't go (no evidence to support that prognosis), the land gets sold on (it wont have lost any value) and I carry on putting in the £2500 a month until its sold. There is a clear investor exit strategy.
Without knowing more, it doesn't appear the business needs to own the land to work. In which case, it just needs £20k or so to get going. Owning the land would be a luxury.
What you have is an untested, non-existent business that inexplicably wants to own, from the outset, a half million pound piece of land.
If the business goes to plan it makes £65k a year (which isn't even really an exciting salary).
If you want to scale it in the same way it needs around £500k per site.
Notwithstanding, if the new venture goes well, you will get local competition who will look at £20k as the barrier to entry (not a lot) against your £500k.
Too many hit and hopes in the investment and, without knowing why, a need to purchase land when the business can't afford it.
What you have is an untested, non-existent business that inexplicably wants to own, from the outset, a half million pound piece of land.
If the business goes to plan it makes £65k a year (which isn't even really an exciting salary).
If you want to scale it in the same way it needs around £500k per site.
Notwithstanding, if the new venture goes well, you will get local competition who will look at £20k as the barrier to entry (not a lot) against your £500k.
Too many hit and hopes in the investment and, without knowing why, a need to purchase land when the business can't afford it.
janesmith1950 said:
Without knowing more, it doesn't appear the business needs to own the land to work. In which case, it just needs £20k or so to get going. Owning the land would be a luxury.
What you have is an untested, non-existent business that inexplicably wants to own, from the outset, a half million pound piece of land.
If the business goes to plan it makes £65k a year (which isn't even really an exciting salary).
If you want to scale it in the same way it needs around £500k per site.
Notwithstanding, if the new venture goes well, you will get local competition who will look at £20k as the barrier to entry (not a lot) against your £500k.
Too many hit and hopes in the investment and, without knowing why, a need to purchase land when the business can't afford it.
This is good advice. You need to look short term, because that's where your risk is. If you need to walk away then disposing of a £500k asset is leaving you wide open IMHO. It could end very badly and you really should make things as easy as possible for yourself. As the poster said above without any further details its difficult to build a picture other than that.What you have is an untested, non-existent business that inexplicably wants to own, from the outset, a half million pound piece of land.
If the business goes to plan it makes £65k a year (which isn't even really an exciting salary).
If you want to scale it in the same way it needs around £500k per site.
Notwithstanding, if the new venture goes well, you will get local competition who will look at £20k as the barrier to entry (not a lot) against your £500k.
Too many hit and hopes in the investment and, without knowing why, a need to purchase land when the business can't afford it.
If I’m reading this right I could set up the same business for £20k plus 6k p/a lease on the land.
For £50k I could be doing what you want to do having paid a 5 year lease in full.
For my £500k I could do it ten times over giving me a £590k return.
Unless there’s a reason why land ownership is essential, the model seems extremely flawed.
For £50k I could be doing what you want to do having paid a 5 year lease in full.
For my £500k I could do it ten times over giving me a £590k return.
Unless there’s a reason why land ownership is essential, the model seems extremely flawed.
Edited by bristolbaron on Sunday 2nd June 12:49
I am now a bit confused. Your extra info above implies (round numbers) this is a 20k investment that returns 65k a year, but requires 0.5m of land to do it. The land could be rented for 6k, making it a 26k yr1 investment returning 65k with no transaction costs for the land purchase ?
You're a startup. Query every penny going out of the door.
Is this a land development thing where you are buying land in order to do something to it and increase its value for future sale ? In which case why would the land owner sell to you rather than hire you to do the work and capture the uplift for themselves.
Or is it a business that needs a lot of space to operate in which case why do you need to own the land rather than rent it ?
You're a startup. Query every penny going out of the door.
Is this a land development thing where you are buying land in order to do something to it and increase its value for future sale ? In which case why would the land owner sell to you rather than hire you to do the work and capture the uplift for themselves.
Or is it a business that needs a lot of space to operate in which case why do you need to own the land rather than rent it ?
What’s the barriers to entry in this business idea?
If it’s merely the right type of land and £500k then if your business flies “me2” will hop on board eating into your market share.
Actually what’s the size of the market?how many me2’s could you cope with before you cannot deliver the returns?
Is anything your aiming to do possible to protect ?
How liquid is the investors cash in? You’d have to pay him for 8 years just to get his initial investment back - double that for his perspective as taxman will take a nice slice of his annual returns.
If it’s merely the right type of land and £500k then if your business flies “me2” will hop on board eating into your market share.
Actually what’s the size of the market?how many me2’s could you cope with before you cannot deliver the returns?
Is anything your aiming to do possible to protect ?
How liquid is the investors cash in? You’d have to pay him for 8 years just to get his initial investment back - double that for his perspective as taxman will take a nice slice of his annual returns.
As others have said, renting the land (for at least the first site) seems like a lower risk way of trying this out
As you have £70k of your own you could set up 2 and maybe even 3 sites on leased land before even needing to think about external investors
Even if you only set up 1 and it did the numbers you suggest it will, that is a more investable case than just a spreadsheet
As you have £70k of your own you could set up 2 and maybe even 3 sites on leased land before even needing to think about external investors
Even if you only set up 1 and it did the numbers you suggest it will, that is a more investable case than just a spreadsheet
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