Monday, November 9, 2009

The problem of start up funding

So, I had a good printing bid. I knew this company was legitimate. I had an idea for a book that didn't really exist and for which I had a market to sell. My LLC was set up and functional.

What I didn't have: $6,000 to get the business going and to print two thousand copies.

This was the tricky time in the summer of 2009 when credit card companies were tanking. The public was upset at the federal bailouts of banks. And places like Citibank were increasing their card rates and lowering card holders' maximums. One of the cards I held increased my rate from 8% to 18% on a whim. I truly did not want to go that direction.

I set up my account at my regular bank and talked to them about a loan. My bank rep was friendly and wonderful but not terribly optimistic about my chances of getting one. He suggested I put together a business plan and bring it in, along with my Operating Agreement (the one the state hadn't wanted when I filed.)

I spent about a week on the business plan, trying to predict how much money I would need, how much I would make. I Googled every business plan I could find, taking out sections.

Here was the table of contents of my final business plan:
  • Company Summary
  • Start Up Summary
  • Table: Start Up
  • Products
  • Market Analysis Summary
  • Table: Market 1 Analysis
  • Table: Market 2 Analysis
  • Strategy and Implementation Summary
  • Table: Sales Forecast
  • Milestones
  • Table: Milestones
  • Management Summary
  • Financial Plan
  • Table: Start Up Funding
  • Table: Profit and Loss
I brought all this to the bank and got my verdict about a week later: no. The bank rep revised the request and another week later got another answer: no.

Now I wasn't sure what I would do. I couldn't float this on terribly bloated credit card rates: it would eat my profit and wreck my credit standing by filling up my cards.

Maybe, just maybe I could put out a very inexpensive Print on Demand book, get it out there, and use the money from it to finance this more expensive book that required printing up front. I had another idea for a book, one I could do myself, and I knew a book designer who owed me a favor. I also was aware of a pretty big audience I might could tap locally, if I handled it just right.

I went immediately to look at a book I knew would help: Aaron Shepard's Aiming at Amazon. I felt very poor, very worried about my prospects with this company, and wasn't sure I could even buy the book right then. I tooled around Aaron's site a bit for advice and found the most amazing thing. I literally wanted to cry when I saw it. Aaron had posted his entire book in electronic format for free.

His generosity in doing this changed just about everything.
Links related to this post:
Aaron Shepard's website
The Small Business Administration's guide to writing a business plan
More advice on business plans
And more advice on business plans

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