February 27, 2007 by mrbizplan.

FamilyMan Asks

I already have a patent and a business plan put together. I know I need about $100 million to for start-up costs and to cover expenses for the first three years. Most banks will not lend that kind of money no matter how good your business plan is. Where can I go or who can I talk to about borrowing that kind of money?

Mr BizPlan Answers

The only place you can get that kind of money is through an IPO (going public) but before you can do that you have to have a track record of (extreme) success. 

I would consider scaling down the project down or rolling it out in phases. $100,000,000 is an unreasonable sum of money to request for a startup.  You could start with 5 million or 1 million (or less) - which is still difficult sum of money to obtain but at least you would have a fighting chance.

Further, you shouldn’t need three years worth of capital to get to breakeven.  Most investors look for a three to five year payback so if you are just starting to make money after three years you won’t find many interested investors.  The quicker you are profitable the better. 

You could also try an online angel capital network such as the Go Big Network.

Good Luck

Mr BizPlan

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February 19, 2007 by mrbizplan.

webman asks:

I am hoping to start up an eatery (almost like a deli) business and I am wondering how much money it would cost to start up this type of business. Also if posible, spread it out into categories. e.g. how much does it cost to rent the building? how much does it cost to get the minimum amount of equipment, etc…

Mr. BizPlan Answers:

I have worked with a lot of deli style franchises and typically they cost between $150,000-$270,000 depending on square footage (1500-2500 sq ft within those ranges). Subtract $25,000-$35,000 for the franchise fee and you should be in the ball park.

The breakdown of this investment is typically:
Fit up of leased space: 25%
Furniture & Fixtures: 20%
Equipment: 10%
Start-Up Expenses: 30%
Cash on Hand: 15%

But these vary depending on a number of factors.

If you are looking for more general information on starting and financing a business check here: http://www.diybizplan.com

Good Luck
Mr BizPlan

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February 8, 2007 by mrbizplan.

java girl asks:

I have a great opportunity right now to take m y business to the next level. I recently moved to a “sleeper community” in other words there is a lot of stuff coming and happening in the near future. If I could get together the $ to get started I would be in a great position to dominate the market NOW before the boom starts! 

My personal credit has taken a beating over the years as my husband has had some serious health issues. If I can get this going it could change all that pretty quickly but getting start up cash is difficult. Any suggestions or advice would be appreciated!

Mr BizPlan Answers:

Bad Credit is not always a death knell when it comes to business banking. If there is a legitimate reason why you have poor credit some lenders can look past it. Typically, health problems, divorce, or a layoff (known as “life events”) can ruin a persons credit report through no fault of their own.

Banks look at six main criteria when judging a business loan: Credit, Capital, Collateral, Capacity, Character, and Conditions, explained further in our Commercial Financing article.

The point is that there are various criteria a lender will look at when underwriting the loan. The above criteria is NOT a checklist. Most projects are week in one area or another. Lenders reduce exposure by weighting the above criteria and making adjustments. So for example…if your project is light on collateral they will require more cash down payment. Bad credit, usually means a higher interest rate and additional collateral to secure the loan.

Most importantly…be upfront about your credit issues. If you try to hide it they will find out anyway and it will make you look dishonest. Just tell them upfront…you have a great opportunity, lots of character but you have a few spots on your credit.

Finally, the best day to start repairing your credit is TODAY! Don’t wait because your most recent credit history is the most important. If you show that the last X months were current (paid on time) then it becomes easier to overlook the old blemishes on your report.

Your Credit is Important…too important to be an unknown or ignored. Find out what your score is today, start repairing bad credit or any blemishes TODAY, and monitor your credit with a monthly credit watch service.

Good Luck
Mr BizPlan

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