Need Money for Stock??

Carb

I'm trying to st up a warehouse style business ie. no fancy showroom or associated costs. selling an imported product by local advertising, perhaps an online/ebay set up also. I'd send out free samples to people who make enquiries. Initially my only costs would be storage, which will be very cheap, a mobile phone, a small bit of advertising and stock. There is potentially a 25/30% margin. My only problem is paying for the stock. To be economically viable. I need to take in a a 20 foot container load, and this would cost in the region of 25/30K. Believe or not, I'm not in a position where I can take out a 30K personal loan. I know I could go to a bank with a business plan, but they woould probably be looking for market research etc, which would be ridiculous as 5 to 10 customers could possibly be enough to sell a container load. That siad I will be talking to the bank anyway.

I was just wondering are there financial products out there that can be secured on stock, or does anyone have any other suggestions.

kluivert

Sources of Finance would be depending on the situation

• Business angel finance
• Trade Credit
• Venture Capital
• Friends and Family
• Savings

Is samples necessary, may need to question the possible uptake from each sample sent out. Maybe a narative desciption would be better? Just seems like an unnecessary cost but could be wrong.

If this is a niche market, then maybe save hard for a year or so.

Good luck with the new venture Carb.

Carb

kluivert wrote:

Sources of Finance would be depending on the situation

• Business angel finance
• Trade Credit
• Venture Capital
• Friends and Family
• Savings

Is samples necessary, may need to question the possible uptake from each sample sent out. Maybe a narative desciption would be better? Just seems like an unnecessary cost but could be wrong.

If this is a niche market, then maybe save hard for a year or so.

Good luck with the new venture Carb.

Nothing unusual about the product or the market. A lot of business' are already selling it, just at silly prices, probably because they've got silly overheads.

The samples wouldn't be a big cost. It'll probably cost more to post them. But people wouldn't enquire unless they're interested in buying.

REDZ

you should be able to secure a loan on the stock, talk to the bank manager

businessAdvisor

Stocking loans are not uncommon and work aonthe principle that you repay the loan as you sell the stock normaly taken over short term less than a year ( normaly used in agricultural sector where animals are bough at the beginig of a season and sold at the end of the year) most banks provide them i used to us BOI .

a word of warning though allow yourself a long enough term to sell the stock before you need to repay the loan.

good luck with the venture

fintan

why don't you buy enough to give away as samples
take orders from people (cash up front) then buy the container load of materials?

So essentially your customers are footing the bill.

There may be a delay to the customer so you offer a bigger discount on the first few orders you receive.

RainyDay

Carb wrote:

I know I could go to a bank with a business plan, but they woould probably be looking for market research etc, which would be ridiculous as 5 to 10 customers could possibly be enough to sell a container load.

If the business is a good as you think, it will be fairly straightforward to put together a good business plan. Don't jump into putting 20k-30k of your own money on the line without taking the time to do a business plan for yourself (not just for the bank).

stepbar

Go to BOI they have a €20mil fund to loan for people like ur self, i think i read it in on of the business sections recently think the most they will give is €25k

onedmc

REDZ wrote:

you should be able to secure a loan on the stock, talk to the bank manager

Are u mad or what planet are you from. No bank will loan against stock for an established business not to mind an unproven one.

And before you have a go at me about trade finance and banks taking ownerships again letters of gaurantee, all those financial instruments are for big companies with high turnovers of stock.

Your stock is worthless to the bank and thefore no good as collateral.

You are on you own as an un-established trader your suppliers will not give you credit until you are established and if they outside EU you will probably never get credit.

onedmc

businessAdvisor wrote:

Stocking loans are not uncommon and work aonthe principle that you repay the loan as you sell the stock normaly taken over short term less than a year ( normaly used in agricultural sector where animals are bough at the beginig of a season and sold at the end of the year) most banks provide them i used to us BOI .

a word of warning though allow yourself a long enough term to sell the stock before you need to repay the loan.

good luck with the venture

This may work with farmers but dont mislead the lad, YOU WONT GET THE MONEY FROM THE BANK for STOCK.

You may get a loan for machinery you may get sponsorship for export business.

The best way the get the money for this is to to get the purchase orders from the 4 or 5 potential customers. Produce the proforma invoice and then bring them to the bank or factoring company. The'll either loan you the money or take a factoring fee (Say 15%) and away you go.

Carb

Thanks guys for the replies. I'd actually forgot all about this thread, so thanks fior keeping it going. Some very different opinions here.

I've decided to go with a a more local supplier, who will sell to me as I receive orders. It means a much smaller margin, but it will also give me a good indication of the demand and what people are willing to pay, without the risks of buying a large quantity. Once I'm more establised, I'll investigate buying larger quantities.

onedmc

Carb wrote:

.... There is potentially a 25/30% margin...

If this is a retail product then this type of Gross margin is very low.

Remember most shops double the price of the product and them add VAT. When it comes to fashon (except shoes) then its normally 3 times.

And remember ontop of that and agent is taking perhaps 10% off the original and the wholesales takeing 30%.

Carb

onedmc wrote:

If this is a retail product then this type of Gross margin is very low.

The clue is in my sig.

I was speaking roughly about the Gross margin. As I mentioned earlier, I won't have fixed costs (initially anyway) so admin costs are unlikey to come near 5%. It would depend on the return on advertising, but as I'm concentrating on classifieds initially, costs here will be low. I'll soon dsicover if people are willing to buy this way or whether they'd prefer to pay over the odds in a fancy showroom, which no doubt some people do.

onedmc

Be particullarly careful with wood products. I imported furniture from the far-east expect an imperfect rate of 20-30% and then you have another 5% damage in transit problem.

I would sell the product at 5 times what I paid for it and the end retail price would have at least doubled again. I still didn't make much money out of it perhaps a couple of grand on an outlay of 30K.

The biggest issue that there is with wood is poorly dried wood so it's vital that all wood is furnice dried unless u really know what u are doning and have access to repair facilities locally.

Any product that can be exactly described in a couple words is good for online sales.