Jonalong Posted September 19, 2012 Report Share Posted September 19, 2012 I am currently in the process of trying to start up a bike shop... company plan is nearly there, need to register the company and then try and get a small business loan! Has anyone done this before? Any suggestions on banks? Or general advice? Many thanks Jon Quote Link to comment Share on other sites More sharing options...
Wrayvon Posted September 19, 2012 Report Share Posted September 19, 2012 Hmm starting a bike shop sounds familiar, Tarty bikes perhaps? Although that is a mail order company granted but still, he is probably a good person to speak to I imagine! Quote Link to comment Share on other sites More sharing options...
Greetings Posted September 19, 2012 Report Share Posted September 19, 2012 I know you're trying to gather some info but if all you know so far is that you need to register a company and get a loan, you're better off thinking this through properly. Good luck none the less Quote Link to comment Share on other sites More sharing options...
Jonalong Posted September 19, 2012 Author Report Share Posted September 19, 2012 Haha, I have thought about a fair bit! I didn't want to bore everyone with the details, just wondered if anyone had had success with a specific bank! by no means is that all I know you need to do I'll expand slightly... Starting an independent bike shop, little competition in the area, product range and target market is sussed, suppliers etc sorted, I have a business plan, profit and loss forecast, cash flow, the potential premises have been whittled down, I am now looking at the borrowing... all the above need to be drawn up before approaching a bank! I am in the jolly process of assessing my best financial options - business loan? personal loan? half and half? its quite a minefield with all the options available for finance, alongside everything else that needs to be sorted! Its not what you know, its who you know! I like to try and get advice and information from as many sources as possible, a bike forum would seem like a good place to me! 1 Quote Link to comment Share on other sites More sharing options...
Greetings Posted September 19, 2012 Report Share Posted September 19, 2012 Looks like you've got it all sorted out then (well, almost all). Can't help with the loan side of things, I've been running a similar business to Tarty for 5 years now but didn't need a loan, it gradually expanded from a bedroom store to a normal outlet. I think it was a similar case with Tarty, not sure about loans though. Usually if a mail order company has to expand it's premises, it's doing exceptionally well and can more often than not do without a loan. You will need one though, definitely. Quote Link to comment Share on other sites More sharing options...
Miss-Higgy Posted September 19, 2012 Report Share Posted September 19, 2012 To be fair in the current climate very few banks are happy to hand out loans unless you have some capital of your own to put in, for say a 50k loan they will probably want to be seeing about 20k of your own in the bank. I had the same mission not so long back and i gave up trying to borrow from the banks. But having been round them all having meetings with business advisor's, NatWest, Barkleys & HSBC seemed like my best option. Also if you can get the amount you need to borrow on a personal loan. Do it that way as the business accounts don't actually offer much for small businesses, and there's normally a larger charge for a business account. Hope this helps 1 Quote Link to comment Share on other sites More sharing options...
Jonalong Posted September 19, 2012 Author Report Share Posted September 19, 2012 (edited) Looks like you've got it all sorted out then (well, almost all). Can't help with the loan side of things, I've been running a similar business to Tarty for 5 years now but didn't need a loan, it gradually expanded from a bedroom store to a normal outlet. I think it was a similar case with Tarty, not sure about loans though. Usually if a mail order company has to expand it's premises, it's doing exceptionally well and can more often than not do without a loan. You will need one though, definitely. Ok, thanks very much! yeah I would imagine that would be possible for a primarily internet based business, its opening premises and getting everything set up that is going to cost me the money! To be fair in the current climate very few banks are happy to hand out loans unless you have some capital of your own to put in, for say a 50k loan they will probably want to be seeing about 20k of your own in the bank. I had the same mission not so long back and i gave up trying to borrow from the banks. But having been round them all having meetings with business advisor's, NatWest, Barkleys & HSBC seemed like my best option. Also if you can get the amount you need to borrow on a personal loan. Do it that way as the business accounts don't actually offer much for small businesses, and there's normally a larger charge for a business account. Hope this helps Thanks very much for sharing your experience, this is how I expected really, I had been considering a personal loan, but have been advised that if I register as a Ltd company, and manage to secure finance against the company rather than me, should everything go pop - the bank and "company" will suffer rather than my pocket! However i feel that if I could get everything off the ground there shouldn't be too much chance of it going down the drain! I think it might be a case of getting a personal loan secured against my parents house! should be an interesting conversation! haha Thanks again. Jon Edited September 19, 2012 by Jonalong Quote Link to comment Share on other sites More sharing options...
Luke Dunstan Posted September 19, 2012 Report Share Posted September 19, 2012 Maybe look for investors rather than trying to get a loan? 1 Quote Link to comment Share on other sites More sharing options...
Matt Vandart Posted September 19, 2012 Report Share Posted September 19, 2012 You are doing it the right way. Always start a business with someone elses money, I got that bit of info from the head of business of a certain high street bank. Word of warning, I started a bike shop and ploughed my money into it as the banks had said they would loan me the rest, they didn't the recession kicked in and that was that, took a big loss that year but hey ho and away we go, donkey riding donkey riding...... In your business plan your most important part is the CASH FLOW forecast the profit and loss bit is neither here nor there you will either make a profit or a loss you can do neither without cash flow. What sort of start up figures are ye looking at? Quote Link to comment Share on other sites More sharing options...
JD™ Posted September 19, 2012 Report Share Posted September 19, 2012 and manage to secure finance against the company rather than me, should everything go pop - the bank and "company" will suffer rather than my pocket! Good luck getting any easy funding against a company with no accounts at the moment - you'll want 3 years accounts ideally... BUT obviously there is money out there for startups, you just have to try even harder than usual to get it. In your case, that's going to mean a rock solid business plan with accurate projections on both cash flow and profit. That means having agreements in principle available from distributers who have said they're willing to associate themselves with your new shop to give you the stock, as well as market research that categorically says that you'll be able to sell that stock in the area you'll be in. Good luck! Quote Link to comment Share on other sites More sharing options...
Simpson Posted September 19, 2012 Report Share Posted September 19, 2012 I would never open a bike shop, most lose money on shops, internet is where its at when you launch, if you can't sell on the internet then there's no way you'll sell in a shop. If I were to think about it I'd get a contract with Cycles UK or similar, at an old shop we worked at we got all returned mail order bikes for £10 - bit of repairing they were £130 bikes easy, sell on ebay - happy days. 1 Quote Link to comment Share on other sites More sharing options...
Jonalong Posted September 19, 2012 Author Report Share Posted September 19, 2012 I would never open a bike shop, most lose money on shops, internet is where its at when you launch, if you can't sell on the internet then there's no way you'll sell in a shop. If I were to think about it I'd get a contract with Cycles UK or similar, at an old shop we worked at we got all returned mail order bikes for £10 - bit of repairing they were £130 bikes easy, sell on ebay - happy days. There is a lot of people out there that need work done on their bikes, most bike shops can survive on servicing and labour alone, bike sales do not account for much of their profit. The only bike shop we have in town has waiting times of over a month just to bleed my maguras! (with 2 or 3 workshop guys!) Initial set up costs will be around £25k, with predicted turnover value of around £20k a month and costs of £18k -(worst case) - this is based on pretty low sales figures. Where there is a will there is a way, I'd rather take a risk and start making my own money, than never risk it and end up lining someone else's pockets for the rest of my life! Quote Link to comment Share on other sites More sharing options...
Jonalong Posted September 19, 2012 Author Report Share Posted September 19, 2012 Maybe look for investors rather than trying to get a loan? I would not fancy sharing the profits further down the line... Plan would be to expand the business if all went well! Thanks for the suggestion though. Jon Quote Link to comment Share on other sites More sharing options...
Matt Vandart Posted September 19, 2012 Report Share Posted September 19, 2012 Not meaning to piss on your plans but you will need more startup money plus at least that again as working capital. Also not meaning to be offensive but if you are starting on a budget then it would be really handy to know how o do simple things like bleed maguras. Please note I am not trying to put you off, I am just throwing my opinion out there, as you are well aware all opinions matter in considering a business including the 'negative' ones. Quote Link to comment Share on other sites More sharing options...
Jonalong Posted September 19, 2012 Author Report Share Posted September 19, 2012 (edited) Not meaning to piss on your plans but you will need more startup money plus at least that again as working capital. Also not meaning to be offensive but if you are starting on a budget then it would be really handy to know how o do simple things like bleed maguras. Please note I am not trying to put you off, I am just throwing my opinion out there, as you are well aware all opinions matter in considering a business including the 'negative' ones. Haha, no problem, criticism is happily accepted! I know how to bleed maggies.. didn't have a bleed kit at the time and was meant to be going out on a ride later that day! That was an purely an example Anyway that's beside the point, I have a guy lined up (with 15 years experience running a bike shops) that will be managing the shop day to day and will be servicing etc etc! Could you please advise on what additional start up money I would need? (Agreed, £25k is on the low side, I would budget for around £35k) Edited September 19, 2012 by Jonalong Quote Link to comment Share on other sites More sharing options...
Matt Vandart Posted September 19, 2012 Report Share Posted September 19, 2012 My calculations came up with a figure of 40k with that again as working capital. Quote Link to comment Share on other sites More sharing options...
Simpson Posted September 19, 2012 Report Share Posted September 19, 2012 Could you please advise on what additional start up money I would need? (Agreed, £25k is on the low side, I would budget for around £35k) Theres no "this is how much start up will be" if your seriously going to walk into a bank and ask for money you need a whole business plan package, which if you do properly will take you of least a month to set up. You need to be able to account for and be knowledgeable about.... refurbishment, decor, stands, bikes, stock, suppliers, wages, national insurance, rent, workshop, liability insurance, contingency, marketing, launch, deadlines, cash flow projections, budget allocation, electronic POS, contracts, break clauses, limited company?, sole trader?, buiness insurance, building rates, water, electric, USP, demand projection, distribution. Personally I wouldn't employ someone with "15 years exp" because that essentially means £20k plus per year? You should be that "high" paid guy in your business. Also remember that 70-80% of businesses fail or lose money in their first year. So if you think you can go "urrrrr I wanna bike shop" and someones going to give the money to you, then you are stoned. All money borrowed will be at a very high rate which you need to account for in your business plan. And if that numbers too high then they won't invest in you because their repayments will cripple your company. From my finance exp if you do get money expect it to be at 20% or more? My cousin set up a tiny fashion store last year where staff were paid based on profits and he still needed £100k and hes already lost it all. 1 Quote Link to comment Share on other sites More sharing options...
RobinJI Posted September 19, 2012 Report Share Posted September 19, 2012 I'm in kind of a similar situation, (although with a pretty different business), so I'd be interested to hear which banks seem to be good. I'd kind of agree that you'll be needing more money than that, that's about the amount I expect I'll be looking at borrowing, but I won't have customers visiting my premises, I shouldn't have to hire anyone for at least a year, and I'll be deliberately taking a loss of a few grand in the first year. I'm not actually looking to borrow for a little bit, as I'm trying to get partially established first. I'm in a lucky position where I'm friendly with a similar (but not competing) company who's kit I can use while I build up my own, so the injection of capital will basically be used to move to being independent of them and jump up in size rather than start from nothing. Without that I'd sure as hell need more money. Good luck with it all anyway, it's an interesting thing to do! I'm equally bricking my self and excited about doing it! Quote Link to comment Share on other sites More sharing options...
Jonalong Posted September 20, 2012 Author Report Share Posted September 20, 2012 "Theres no "this is how much start up will be" if your seriously going to walk into a bank and ask for money you need a whole business plan package, which if you do properly will take you of least a month to set up" ---This is why I was interested to hear exactly how this guy had figured out that I was under budget, with little to no information of the company plan, or what has been lined up. I'm simply asking about peoples experiences with lenders... It’s interesting to hear assumptions with no knowledge of what I am paying for shop rent, fit out, stock, etc! You need to be able to account for and be knowledgeable about.... refurbishment, decor, stands, bikes, stock, suppliers, wages, national insurance, rent, workshop, liability insurance, contingency, marketing, launch, deadlines, cash flow projections, budget allocation, electronic POS, contracts, break clauses, limited company?, sole trader?, business insurance, building rates, water, electric, USP, demand projection, distribution. -----Refurb is not required, the rest of your list - This has all been drawn up by myself and my accountant, who is also an excellent friend of mine and has done this many times before. J "Personally I wouldn't employ someone with "15 years exp" because that essentially means £20k plus per year? You should be that "high" paid guy in your business. Also remember that 70-80% of businesses fail or lose money in their first year. So if you think you can go "urrrrr I wanna bike shop" and someones going to give the money to you, then you are stoned. All money borrowed will be at a very high rate which you need to account for in your business plan. And if that numbers too high then they won't invest in you because their repayments will cripple your company. From my finance exp if you do get money expect it to be at 20% or more?" -----I understand where you are coming from, but time goes fast when you start working in a bike shop at 13…. He’s now 28 and will be doing the day to day running of the shop whilst I manage the business and continue with my other work. I do not plan to pay myself out of the companies money for the first year or so... I will continue to earn money through my current profession. 20% or more?! I would rather save up the money myself than pay that! I think I can currently get the money for 7-8% if I were to do it through a personal loan. (Not recommended!) What do you do for a living out of interest? -----------RobinJI Thanks mate and good luck! I will let you know how it all goes, I’m looking forward to getting stuck in now! It really helps when you can use others with parts and experience that help you along the way! I couldn’t have done this with my experience alone! My calculations came up with a figure of 40k with that again as working capital. Could you please share your calculations? Would be very helpful! Thanks. Quote Link to comment Share on other sites More sharing options...
Simpson Posted September 20, 2012 Report Share Posted September 20, 2012 Currently working as an finance analyst but before worked in the financial leasing industry where blue chip company's got 6-7%, established business with collateral would be at 10-15% and we wouldn't touch anything less with a barge-pole. Hence why I put a question mark afterwards, cos its uncharted ground for me. Understand I'm not slating your business in the slightest, if you've know your stuff you know you stuff, if you can get the money and make it successful then fair-play but when you say things like "I think it might be a case of getting a personal loan secured against my parents house! should be an interesting conversation! haha" Then I start to think your not ready yet. Quote Link to comment Share on other sites More sharing options...
Jonalong Posted September 20, 2012 Author Report Share Posted September 20, 2012 Currently working as an finance analyst but before worked in the financial leasing industry where blue chip company's got 6-7%, established business with collateral would be at 10-15% and we wouldn't touch anything less with a barge-pole. Hence why I put a question mark afterwards, cos its uncharted ground for me. Understand I'm not slating your business in the slightest, if you've know your stuff you know you stuff, if you can get the money and make it successful then fair-play but when you say things like "I think it might be a case of getting a personal loan secured against my parents house! should be an interesting conversation! haha" Then I start to think your not ready yet. No problem, everyone has to learn at some point, and this is generally how I do it - asking lots of people their opinion and for their advice, then mushing it all together to make up my own mind! Looking back at my posts I think I have probably given the wrong impression of what I am after/have meant - sometimes a problem with writing things rather than real life interaction! I'm not trying to put across that I know exactly what I'm doing, I have always taken risks and generally seem to get away with it and come out on top. I have done all the dog work to get to this point, its the finance that I am now after, and any advice is going to be invaluable. I still need to actually go in to my bank and sit down and have a chat with the relevant folk, therefore I can't really comment on potential interest rates right now. But with the parents thing.... I just think it would be beneficial for me to take advantage of the comfortable financial situation they are in (i.e paid off mortgage, excellent credit rating) Rather than screwing myself over and paying the higher rates that I would be forced to use without having any assets to secure decent rates against. (I know for sure they could get £25k plus @ 7.5% ish) It's just the high risk of losing the money that would be worrying! Both are options at the moment. Do you agree? Quote Link to comment Share on other sites More sharing options...
Simpson Posted September 20, 2012 Report Share Posted September 20, 2012 this may be some use: http://www.bikewebsite.com/store.html If would never touch my parents house. I think its disrespectful to even ask. But each to their own. Quote Link to comment Share on other sites More sharing options...
Jonalong Posted September 20, 2012 Author Report Share Posted September 20, 2012 (edited) this may be some use: http://www.bikewebsite.com/store.html If would never touch my parents house. I think its disrespectful to even ask. But each to their own. F*ck it... here you go! That site looks a bit basic to me! Income Per Year Per Month Low Range Bike Sales £ 71,400.00 £ 5,950.00 Mid Range Bike Sales £ 61,200.00 £ 5,100.00 High Range Bike Sales £ 51,000.00 £ 4,250.00 Accessory sales £ 18,200.00 £ 1,516.67 Total £ 201,800.00 £ 16,816.67 Service Sales £ 31,200.00 £ 2,600.00 Total £ 31,200.00 £ 2,600.00 Total Sales Value (Per Month): £ 19,416.67 Purchases (Cost of sales) £ 12,031.67 Less: Closing Stock £ 200.53 Cost of Sales £ 11,831.14 Gross Profit £ 7,585.53 Less: Expenses Staff £ 30,000.00 £ 2,500.00 Shop rent £ 18,500.00 £ 1,541.67 Business rates £ 1,500.00 £ 125.00 Electricity £ 800.00 £ 66.67 Business Insurance £ 400.00 £ 33.33 Public Liability Insurance £ 300.00 £ 25.00 Water £ 300.00 £ 25.00 Phone £ 300.00 £ 25.00 Employers National Insurance £ 2,000.00 £ 166.67 Payroll and bookkeeping fees £ 1,000.00 £ 83.33 Accountancy fees £ 800.00 £ 66.67 Annual return fee £ 15.00 £ 1.25 Website £ 750.00 £ 62.50 Marketing £ 1,500.00 £ 125.00 Repairs, renewals and maintenance £ 1,200.00 £ 100.00 Sundry £ 1,040.00 £ 86.67 Total: £ 60,405.00 £ 5,033.75 Profit: (After Expenses) £ 2,551.78 Less: Corporation Tax £ 510.36 £ 2,041.42 Less: Closing stock £ 200.53 Approximate retained cash (Per Month) £ 1,840.89 Ah that sounds like your stuck in the old days then mate, he who dares wins, if you dont ask you dont get! Ok.. that didnt come out quite how it should have done, never mind. Edited September 20, 2012 by Jonalong Quote Link to comment Share on other sites More sharing options...
JD™ Posted September 20, 2012 Report Share Posted September 20, 2012 You've got your head in the clouds. Quote Link to comment Share on other sites More sharing options...
Jonalong Posted September 20, 2012 Author Report Share Posted September 20, 2012 (edited) Haha possibly! Show me where I'm going wrong! I am kind of throwing ideas around here and I understand it probably looks like I am away with the fairies My job is managing the money on £millions of construction projects, and I make some pretty serious profits on them, so I'm not completely mad Edited September 20, 2012 by Jonalong Quote Link to comment Share on other sites More sharing options...
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