Loans for startups
Discussion
I’ve been toying with the idea of my own business for a few years now and it’s very recently crystallised into something I’m pretty certain I can make work.
Question is loans though - conventional ones rather than investors.
Are these common for startups?
I’ve created a detailed forecast model for Y1 (which subsequent years mirror in terms of activity and finance) based off throughout of 4 very similar businesses in other parts of the north east (competitor business essentially) and the gross income is c.£150k with profit around £40k p/a after all deductions and an assumed loan of £75k on 60mths at 9.9APR
£55k of the cost is the major equipment necessary to deliver, a further 15k fit and finish and the £5k remainder, stock
It’s not a massive ROI for us, but does create jobs in our local community etc... and once the loans done that increases profitability by £18k p/a
Is this unrealistic??
Question is loans though - conventional ones rather than investors.
Are these common for startups?
I’ve created a detailed forecast model for Y1 (which subsequent years mirror in terms of activity and finance) based off throughout of 4 very similar businesses in other parts of the north east (competitor business essentially) and the gross income is c.£150k with profit around £40k p/a after all deductions and an assumed loan of £75k on 60mths at 9.9APR
£55k of the cost is the major equipment necessary to deliver, a further 15k fit and finish and the £5k remainder, stock
It’s not a massive ROI for us, but does create jobs in our local community etc... and once the loans done that increases profitability by £18k p/a
Is this unrealistic??
Well, there are loans, grants and funding out there to support start-ups.....but £75k will require you to guarantee it regardless of whether the company has limited liability or not. If you don't have the capital worth to guarantee it, you may struggle without offering equity and even then, it may be tough.
But don't let that put you off. Speak to your bank and see what they say. Check for local enterprise grants / support as well.
But don't let that put you off. Speak to your bank and see what they say. Check for local enterprise grants / support as well.
GeneralSinn said:
£55k of the cost is the major equipment necessary to deliver, a further 15k fit and finish and the £5k remainder, stock
May be worthwhile considering Asset Finance (Leasing/HP) if £55k-£70k of it is equipment/installation of some form or other.Might be slighter easier to underwrite as well, being that the funder will have bit of asset security to fall back on (as well as your PG).
Thanks for the above comments
We aren’t sure at the moment in what we can kick in. I’ve got a preapproval for a £35k personal loan, which would then reduce the startup loan drastically (and is only at 2.9% so payments are a lot lower too)
I have an appt on Thursday with a startup advisor to find out about local finance opportunities plus an accountant to discuss vat and tax plus what form would best suit the needs of the business.
I don’t believe there exists the opportunity to rent the equipment as it’s an indoor adventure playground and they are pretty bespoke.
We aren’t sure at the moment in what we can kick in. I’ve got a preapproval for a £35k personal loan, which would then reduce the startup loan drastically (and is only at 2.9% so payments are a lot lower too)
I have an appt on Thursday with a startup advisor to find out about local finance opportunities plus an accountant to discuss vat and tax plus what form would best suit the needs of the business.
I don’t believe there exists the opportunity to rent the equipment as it’s an indoor adventure playground and they are pretty bespoke.
Yeah the recommended PL tends to sit at £20m but the premiums seem to be levied towards the increased risk (which is fair enough) as the potential risks where kids are involved seem to be quite great.
There is also the recommendation to have regular RoSPA checks carried out which would aide in the event of potential claims. “Regular” hasn’t been defined though from the conversations I’ve had so far
There is also the recommendation to have regular RoSPA checks carried out which would aide in the event of potential claims. “Regular” hasn’t been defined though from the conversations I’ve had so far
GeneralSinn said:
Yeah the recommended PL tends to sit at £20m but the premiums seem to be levied towards the increased risk (which is fair enough) as the potential risks where kids are involved seem to be quite great.
There is also the recommendation to have regular RoSPA checks carried out which would aide in the event of potential claims. “Regular” hasn’t been defined though from the conversations I’ve had so far
We do this and are members of BALPPA too if you need anymore quotes. I could put you in touch with the head of leisure in our place, and he will probably know some asset finance companies that work in the industry.There is also the recommendation to have regular RoSPA checks carried out which would aide in the event of potential claims. “Regular” hasn’t been defined though from the conversations I’ve had so far
Ive funded a few of these back in the day..
5x succesful..
1x was the biggest write off in my old banks region for years.. until some tried to introduce a coffee franchise (a story for another day). However it was probably the biggest soft play site I had ever seen with a scale size pirate ship, (what could possibly go wrong)...
My 2ps worth..
It will be a cafe that you (should) charge access too.
Get the best toddler area you can and fill it with day time mummys.
Do not skim on a coffee machine, buy/lease the most impressive espresso machine (proper you can), or if you can get 2x machines with 2 pumps (in case one needs service/stops working). Do not get a press button one.
The soft play stuff should should be able to get HP/Lease on this, find a local asset finance agent.
Kids Parties, hammer the life out of them... be prepared to spend the rest of your working life dressed as a pirate/cartoon character or princess
what a life!
Banks, if you have a viable and tested business plan, and the profits are north of 250% EBITDA, and you can provide security they will support.
Good luck!
5x succesful..
1x was the biggest write off in my old banks region for years.. until some tried to introduce a coffee franchise (a story for another day). However it was probably the biggest soft play site I had ever seen with a scale size pirate ship, (what could possibly go wrong)...
My 2ps worth..
It will be a cafe that you (should) charge access too.
Get the best toddler area you can and fill it with day time mummys.
Do not skim on a coffee machine, buy/lease the most impressive espresso machine (proper you can), or if you can get 2x machines with 2 pumps (in case one needs service/stops working). Do not get a press button one.
The soft play stuff should should be able to get HP/Lease on this, find a local asset finance agent.
Kids Parties, hammer the life out of them... be prepared to spend the rest of your working life dressed as a pirate/cartoon character or princess
what a life!Banks, if you have a viable and tested business plan, and the profits are north of 250% EBITDA, and you can provide security they will support.
Good luck!
Thanks all! Really insightful!
The f&b side is something I was definitely looking at and even debated looking at a franchise coffee shop to be part of it to add the (perceived) level of kudos!
Def some serious food for thought there! Thanks for taking the time to comment, it’s massively appreciated
The f&b side is something I was definitely looking at and even debated looking at a franchise coffee shop to be part of it to add the (perceived) level of kudos!
Def some serious food for thought there! Thanks for taking the time to comment, it’s massively appreciated
As a rule of thumb your F&B should be about 60% of turnover.. & say 60/70% gross profit.
If your looking at 4/5 £ entry, you want 6/11£ in coffee, cakes, buns.
I’m down in the south east (but have family in the north east) so I know there’s some regional differences in price. But our local kids indoor place is 5£ entry , 2.5£ cappuccino, 3.0£ + for brake bros cake, for example, which is reasonable to return too, and I know they are making a good margin which is healthy for them.
There’s another one which is on a farm, but is only 30£ per year per person, and again reasonable priced for food etc..
Rent and rates are the key in our area, not so sure on what you would get charged. But a trampoline park I did last yr was 80k rent 30 rates!!! The break even was north of 7k a week.
Be prepared to have a decent replace and renew budget, as this stuff does get heavily used.
If you keep it small and friendly they make great dad and daughter (or any other family combination) business.
Let us know how you get on!
If your looking at 4/5 £ entry, you want 6/11£ in coffee, cakes, buns.
I’m down in the south east (but have family in the north east) so I know there’s some regional differences in price. But our local kids indoor place is 5£ entry , 2.5£ cappuccino, 3.0£ + for brake bros cake, for example, which is reasonable to return too, and I know they are making a good margin which is healthy for them.
There’s another one which is on a farm, but is only 30£ per year per person, and again reasonable priced for food etc..
Rent and rates are the key in our area, not so sure on what you would get charged. But a trampoline park I did last yr was 80k rent 30 rates!!! The break even was north of 7k a week.
Be prepared to have a decent replace and renew budget, as this stuff does get heavily used.
If you keep it small and friendly they make great dad and daughter (or any other family combination) business.
Let us know how you get on!
If you want a chat about owning / running a soft play then drop me a PM.
Mine opened about two years ago and has done pretty well. I would suggest you start up cost estimates are somewhat on the low side. Even starting with a lot of second hand stuff our start up costs were around double the figures you suggest.
Ours start up costs were funded by a combination of savings and a re-mortgage and were all paid back in about two years even with my business partner taking a salary.
Ben
Mine opened about two years ago and has done pretty well. I would suggest you start up cost estimates are somewhat on the low side. Even starting with a lot of second hand stuff our start up costs were around double the figures you suggest.
Ours start up costs were funded by a combination of savings and a re-mortgage and were all paid back in about two years even with my business partner taking a salary.
Ben
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