Appraiser · Berryville, AR · Member since 2008 · 48 posts · 1 vote
What can I do to make my business plan more inviting? I have an idea for a business that is a money maker but I can not get anyone to invest in it or give me a loan. I am not understanding what I am doing wrong. Is there some sort of advice any of you can give me to help my business plan "pop". It needs to scream SHOW ME THE MONEY!!!! The business would operate at 100% capacity from the minute it is built. I think my major problems are 1: no money for colatoral; 2: not a very good credit score at all (but my partners arent bad!) 3: no actual experience in the field I am wanting to persue (but I do have the knowledge to hire the right people that can do the best job, my job in it would be making sure the place is running at full capacity) and 4: NO MONEY!!! I know, I know, it takes money to make money. Would someone be willing to look over everything I have and see if they can help me fix it?
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
18y
prallen, I assume this business is the drug rehab business you discuss here: http://forums.biggerpockets.com/viewtopic.php?t=15786. This is a tough business. My wife works in this area. Your "customers", meaning the people who need the rehab, won't pay any significant percentage of your costs. Most of your income will come from private, local, state, or federal contracts or grants. Your business, as the leader of this effort, is really running the agency. Writing grant applications, administering staff. Doing the rehab work will fall to your employees or contractors.
Have you actually worked in an agency like this? You'll need that experience in order to know how the processes work. Ideally, you would have already been an ED (executive director) at an agency before you try to create one of your own. I know it can be done. Some of my wife's friends left their agency and started one of their own. But they already had the experience and contacts under their belt.
Frankly, this is a dirty business. The need is so large, and the available funding so low. That means all agencys spend a large effort dealing with fundraising, grant writing, and trying to convince people with money to fund them and not someone else.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
18y
prallen, I assume this business is the drug rehab business you discuss here: http://forums.biggerpockets.com/viewtopic.php?t=15786. This is a tough business. My wife works in this area. Your "customers", meaning the people who need the rehab, won't pay any significant percentage of your costs. Most of your income will come from private, local, state, or federal contracts or grants. Your business, as the leader of this effort, is really running the agency. Writing grant applications, administering staff. Doing the rehab work will fall to your employees or contractors.
Have you actually worked in an agency like this? You'll need that experience in order to know how the processes work. Ideally, you would have already been an ED (executive director) at an agency before you try to create one of your own. I know it can be done. Some of my wife's friends left their agency and started one of their own. But they already had the experience and contacts under their belt.
Frankly, this is a dirty business. The need is so large, and the available funding so low. That means all agencys spend a large effort dealing with fundraising, grant writing, and trying to convince people with money to fund them and not someone else.
Real Estate Investor · Portland, OR · Member since 2008 · 1k+ posts · 23 votes
18y
I may be interested in looking at it for you... I do have some experience in business plan writing and fund raising. What is the nature of the business?
You have lousy credit and no money. To me that means you are a poor money manager.
You have no experience in the field, so to me, your assurance that the new busuness is going to make buckets of money from day one are nothing but empty promises. You have no track record of making any business, or anything else for that matter, into a financial success. So why should I think you will be an instant success on this one?
Apparently, your business proposal does not go into sufficient detail about what start-up costs are, where the money for start-up is coming from, what operating costs are going to be, and where the money is coming from.
You are not presenting a financial team of management that is going to make the business succeed (because with your lousy credit and lack of money, I am not going to trust you to do it).
That's just a start of why I wouldn't give you any money. Get those issues addressed and maybe you will have better luck finding investors. Nobody is going to fund your dreams. If you want money, you must come up with a very solid business plan, where investors can double check your figures.
When you start a new business, you are supposed to put some of your own blood sweat, and tears into it. Ideas are all well and fine, but you have to show that you know how to convert that idea into reality, and in a very concrete way
For a new business idea, you are unlikely to ever get day to day investors interested. If the concept is new, your best hope is venture capital-- and they are going to take a large percentage of ownership, not just passively provide money.
If you've got a really good idea and the well organized schedule of how it is going to be implimented, you should be able to get the money.
Nobody is going to give you any money because you announce that you've got a good idea, with no data to back it up.
I am not trying to discourage you. If you have a good idea, I think you should run with it. If your prospectus isn't getting the investors, you need to work on your business plan until others can see how it is going to succeed, and not expect people to just jump on faith.
If this is the drug center you are talking about, get your non-profit formed and get your government contract.
You get the contract before you start to build. Once you have the contract, if there is any profit in it, you will get your investors, because you have something firm, to show them in writing, about where the profit money is going to come from.
It's normal in commercial to get all the contracts signed before any build-out starts. So the government isn't going to think it is strange for you to want a contract before you build the center.
I'm wondering, though, how large that house is. The government isn't really all that generous and you might need economies of scale to make any money.
The government rarely buys buildings. Most often, they lease them, so you might run into a snag there. Also, you are going to run into problems with staffing and you'd better have a plan about how to deal with that.
Something else you want to think long and hard about is your liability exposure.
Real Estate Investor · Portland, OR · Member since 2008 · 1k+ posts · 23 votes
18y
Well... No sugar coating there... But, it is 100% the truth!
Asking for money is not going to do it... It is “showing” the thing will work, and make money… Which in turn, shows how you are going to pay the money back.
Get organized, build a team with the experience that you may not have, and get it done!
Appraiser · Berryville, AR · Member since 2008 · 48 posts · 1 vote
18y
But should I go with hard money lenders or should I go with angel investors? Which route would be the best with this type of business and my situation?
Appraiser · Berryville, AR · Member since 2008 · 48 posts · 1 vote
18y
I did have a local bank that was going to loan me the money but my plan was to start it in my house in the middle of town. I had to go infront of the planning commission. There was a local reporter there and she just had to put it on the front page of the paper- not good. Everyone in town threw such a fit over it, the bank had phone calls from some of the "higher ups" in town telling them to not loan us the money. What a can of worms that whole ordeal was!!! But there is more than one way to skin a cat, I have found a way to get around all of the red tape. I am going to build in the rural area outside of town. And as far as the houses intown I am using for after care, the city attorney informed me that you can have up to 6 people not related to you living in your home. I know every person in this town that called to the bank and complained and more than one of them has a child that is in desperate need of our services! These people think if you dont speak it it is actually not happening. I guess they would rather these kids ruin their lives than actually admit that we have a major epidemic here.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
18y
prallen, do you have any actual experience in this field? If not, you need a job in some agency, and not investors.
If you actually do have experience, preferably as an executive director (ED) of an existing agency, and you have a solid business plan, you may be able to find an angel investor. I don't think you would find hard money. That's almost always secured by property. You're talking about a business, not property. So, there's nothing to secure.
Forget about selling your existing property to this new agency. Find the proper location where you can get the proper permits and approvals, and lease the space. This type of facility is almost always in some nondescript "light industrial" location. You would never know them from the outside. If you try to do this in a residential location, I guarantee your neighbors will get up in arms and do everything they can to block you.
Trying to form an agency, then sell it your existing property smacks of a conflict of interest. Very unlikely a grant or contract would allow your agency to purchase property, let alone property you own.
I keep thinking about this and I see a sticking point. In order to get a lot of grants-- which you need-- you will need to file for non-profit status.
If you are non-profit, you are going to have a serious problem finding investors.
Hard money will not work. That is short term money. You are going to need money for more than 6 months.
If I were going to do it, I would get non-profit status. Then I would apply for all sorts of grants, and I would also organize the do-gooders of the state into a fund raising machine.
The director and staff can be on salary and it will still be a non-profit. So it can still pay you.
There are philanthropists put there that would fund something like this. But not investors.
To get investors you need to be for profit, and there goes any hope of grant money (although there are still government contracts).
You should be able to get a government contract before you start bulilding. That will help imensely.
I would probably go for a leased building, at least in the beginning.
I wish you the best of luck with this. I think it will be hard, but I also think there is a need, and you can do it if you really want it.
Appraiser · Berryville, AR · Member since 2008 · 48 posts · 1 vote
18y
Thank you all so much for your input. I am going to get this done if it kills me!!!!! I am going to get my non profit status. There is a lady that is going to do a story about it on one of the world news stations. Maybe that will get some money flowing!!!! I have thought alot about what each one has posted. You have been a big help to me. I started this over a year ago but since I have joined this website I feel like I have learned more in a week than I have the entire year and a half. The one thing I have learned before now is there are alot of people out there that are trying to make a buck and say they will help and then you get nothing. I was to the point I thought I could not trust anyone until I came in here. Thank you all for all your ideas. I appreciate you all. If you come up with anything else please let me know.