Problem with Raising Capital Please help!

**Frankie** · 12-30-2009 11:45 AM

Hello

I am just a young graduating student in Ontario, Canada
and I just want to ask a few questions about raising my capital for my business
My business is basically a small ice cream shop up in Muskoka. all the money earned is going towards my university tuition
this ice cream shop that i want to purchase is $30000 canadian, so far i don't have much money on hand so
i am depending on secondary resources for my capital, this ice cream shop has over 45 years of history
so it has a solid customer base, and it has a very stable net income, from the reports of the last 3 years
it was able to earn above $13000 per year.
So far, I looked around the web, and found some loans and grants for young entrepreneurs like me
but the loans are all either below my need or over my age.
also I looked at some angel investors and venture capitalists, but i have lack of understanding on their work.
problems like will they invest in something small like this kind of business?
and how much of business do i have to give up to them?
Also can you suggest some other options for me? that is suitable for me?

**ikjosh** · 12-30-2009 11:52 AM

I wouldn't look for investors - Have you tried going to your local bank?

**Frankie** · 12-30-2009 11:57 AM

because of my age,
many banks do not offer me that much money
and i do not know if i can apply for multiple loans to multiple banks for the same business
so i am also trying to find a secondary solution

**akula** · 12-30-2009 11:29 PM

crap...ur kind of opportunity is largely unfinanceable
so..ok, angels and other external equity is out
what about vendor finance or lbo?
a deal that combines the two is probably the way to go...
do you need me to explain how this works?

**Frankie** · 12-31-2009 11:32 AM

Yes please, if its suitable for me

**LaCosta Lolly** · 12-31-2009 01:09 PM

The first thing you will need before you apply for any commercial financing is a business plan. You can find some templates and guides through the US Small Business Administration or, if you don't have time, work with a business consultant like me. Make sure that you consider things like health department regulations and safety regulation compliance. Most venture capital and angel investor firms won't invest under a few million dollars and will not invest in restaurants of any kind because of the volatility in the industry. Check with local banks and government programs. If you have a relationship with the bank, it will probably help you. If the bank is not offering the full amount, look for investors locally who will be willing to put in 10,000 or more for a portion of the business. Be fair when considering what the investor will need. Having an investor and giving up 15% of the business is better than not having the business at all. I promise though that having a business plan always makes a better impression.

**Frankie** · 12-31-2009 02:04 PM

We are currently working on a very detailed business plan,
we have all the financial statements prepared for next few years based on the reports we received from the previous owner. and all the other things such as expenses
equipments and our salary expense is covered since my siblings are going to be working there for not a lot since they are still kids and they want ice cream more than they want money^_^.
also can you explain to me how inverters like you work?
and are you a venture capitalists? since they trade money with share of the business?

**Frankie** · 12-31-2009 02:05 PM

sorry forget the last part.
didnt read properly

**Frankie** · 12-31-2009 02:11 PM

also since you are a financial advisor
can you please advise me some options other than banks?
like other kinds of investors and such

**DerekS** · 01-01-2010 03:44 PM

How old are you? How much cash do you have on hand? Do you know of anyone who would co-sign on a small business loan? Are you buying the business from the original owner?

Is that $30k for the business or does that include real estate (if not, is there a lease obligation to be fulfilled?)

I'm not trying to hammer you with questions, I'm just curious how turnkey the business is. If it's generating income now, I would think that a properly prepared business plan (as suggested) as well as financial statements from the last few years could demonstrate this to a potential lender.

**ICEMAN2** · 01-01-2010 05:29 PM

Hi Frankie:

Instead of buying the Shop, why not put a Ice Cream Novelty Truck on the road, and make more money.

If the shop only makes $13,000.00 a season, that's low.

Trucks make a lot more than that.

caltheicecreamman(at)hotmail.com

I started selling back in 1988, its a Great business to be in.

Cal
Coquitlam, BC, Canada

**Encrypted** · 01-01-2010 11:08 PM

Originally Posted by ICEMAN2

Hi Frankie:

Instead of buying the Shop, why not put a Ice Cream Novelty Truck on the road, and make more money.

If the shop only makes $13,000.00 a season, that's low.

Trucks make a lot more than that.

caltheicecreamman(at)hotmail.com

I started selling back in 1988, its a Great business to be in.

Cal
Coquitlam, BC, Canada

It depends on your area. All of the ice cream trucks around me went out of business because all of the "kids" grew up. I rarely see anyone walking around my neighborhood anymore.

**akula** · 01-03-2010 03:30 AM

Originally Posted by Frankie

Yes please, if its suitable for me

errrrhh i'm too tired for this, sorry
look up Educate me on Leveraged Buyouts.. see if you get it

**evolvingentrepreneur** · 01-05-2010 03:36 PM

Frankie:

I am 31 years old and have raised $1,540,000 USD from individual "angel" investors for various ventures.

If your ice cream shop will make a profit, then there is an investor or multiple investors that will help you buy it. Raising money is simply a sales process. It is not something to be afraid of, it is not something you cannot learn to do. It is a numbers game.

You simply have to talk to enough people to find the right prospect to buy in to your vision. And, as you go on it gets easier because you get closer to finding the right investors with every contact you make.

The most important questions you must be able to answer when you're face-to-face with a prospective investor are:

1. How much money do you need and when?
2. How and when will the investor get their money back?
3. How much will the investors return be and when will they get it?

Answer these questions before you even bother writing a business plan.

If you get past this point, message me or reply to this post and I'll give you next steps.

Good luck!

**akula** · 01-05-2010 06:50 PM

adam u gonna suggest this guy shops around for external equity..to buy an 80k ice cream shop? masybe you are just not hearing what you are saying. this kind of money is more expensive than borrowing from loan sharks, and he has many cheaper alternatives.