I can't disclose the intricacies of my business, what it does or the name, but i assure you it is 100% legal and follows all legal guidelines locally and federally.. it is NOT a MLM or other crap like that. it's a legitimate business in every sense of the word.
given that, i need your opinion.
our company is formed as an LLC and there are two principles, me and my business partner.
I am thinking about taking out a loan for $20,000 to really get our business jump started. We've been in operation as a company for about a month and have already accumulated $13,141, however this is paid out to us over 14 months give or take, so basically, we're looking at roughly $1200 this month. Hardly enough to live on obviously. Each month that we do more sales, it just adds to our receivables pipeline. If we get the same amount of sales next month as we did this month, we'll get over 2k next month, then 3 the next month etc.
the reason we're doing so poorly is because of the quality of the leads we're getting moreso than our performance and knowledge of the industry we're in. Fortunately, we have money to float us financially until things really take off.
Here's the deal... if we get a loan for 20k, we'd pretty much have to spend all of it within 45 days to purchase a MUCH BETTER quality of leads which would allow us to make sales through a method we're not using currently. The average closing rate for this type of lead is 40% approximately. We are experienced enough to make and surpass that amount. But let's say we werent. You can NEVER expect to make the average, and obviously have to assume the worst right? But lets play with that number first.
lets say we make 40% closing on these leads. If we do this, we'll make 22k THAT MONTH, which would give us 15k to put towards the next month's leads, leaving the other 5k to pay for our operational costs (which are minimal) and to put some money in our pockets for the month. we would make less the next month since we're not buying 20k worth of leads, but we'd make that same 20k the next month PLUS whatever we close the next month, which should be around 40k that month... so on and so forth, and we're looking at a million in May of '10 provided it's just us working and we don't expand and hire employees (which we will)
that definitely sounds worth the 20k investment right? we could pay it off in full in 2 or 3 months feasibly.
but... let's be realistic.. like i said, if someone says you can do something, expect about 1/4th of that, and do those numbers as a worst case scenario.
With the 13k we have coming over 14 months, if we did the same amount of sales next month, we'll have 26k which will more than pay back that 20k loaned.. the interest will be about 5k at the 3rd year of the loan. we could pay it back over 14 months and have profit left over if we shut the doors and never did another sale..
so given that, let's look at what 10% closing would be.
we would make about 8600 the next month from the 20k we invested putting us down 11500 (which is as much as what we already have coming to us over 14 months.... the total we'd have coming to us at that point would be over 95k over 14 months. we wouldn't have enough to put 20k towards buying those leads again the next month, and if we go back to what we were doing and making the same sales we've proven we can make with the leads we have, we'd make close o 19k revenue the next month, close to 30 the month after, which means we could buy more of those leads and explode again - feasibly hitting much better than 10% the next time around.
regardless, no matter WHAT we do, or how poorly we do, we WILL make enough to pay back the loan, but.....
i'm still scared..... that's a lot of money to borrow and though i know i'm 99.9% positive that we will be able to pay it back in no time at all, even if we do poorly, there's still a great deal of hesitation.
i know that it could only do good for us.
one of my bigger hesitations is that the loan has to be taken out in MY name. my partner doesn't have a good enough credit score to get a loan, and the loan we're approved for will not allow me to put his name on it. this means i can't technically make him liable for his portion
however, i'm the majority owner of the company, and i am the primary name on the bank account, my girlfriend of 3 years is the accountant, etc.. the partner doesn't have access to the account, though technically, if he takes his ID, he could pull money from it directly.
I could very easily stop all payments to that account and switch them to my personal account and collect any incoming revenue if he for some reason got flaky. However, if he was an asshole, he could pull whatever money is in there out and close the account, but couldn't change it to where he receives the future payments. Only i have the authority to stop the payments from going into that account.
with all of that said, i have absolutely no worries that he would
given that, i need your opinion.
our company is formed as an LLC and there are two principles, me and my business partner.
I am thinking about taking out a loan for $20,000 to really get our business jump started. We've been in operation as a company for about a month and have already accumulated $13,141, however this is paid out to us over 14 months give or take, so basically, we're looking at roughly $1200 this month. Hardly enough to live on obviously. Each month that we do more sales, it just adds to our receivables pipeline. If we get the same amount of sales next month as we did this month, we'll get over 2k next month, then 3 the next month etc.
the reason we're doing so poorly is because of the quality of the leads we're getting moreso than our performance and knowledge of the industry we're in. Fortunately, we have money to float us financially until things really take off.
Here's the deal... if we get a loan for 20k, we'd pretty much have to spend all of it within 45 days to purchase a MUCH BETTER quality of leads which would allow us to make sales through a method we're not using currently. The average closing rate for this type of lead is 40% approximately. We are experienced enough to make and surpass that amount. But let's say we werent. You can NEVER expect to make the average, and obviously have to assume the worst right? But lets play with that number first.
lets say we make 40% closing on these leads. If we do this, we'll make 22k THAT MONTH, which would give us 15k to put towards the next month's leads, leaving the other 5k to pay for our operational costs (which are minimal) and to put some money in our pockets for the month. we would make less the next month since we're not buying 20k worth of leads, but we'd make that same 20k the next month PLUS whatever we close the next month, which should be around 40k that month... so on and so forth, and we're looking at a million in May of '10 provided it's just us working and we don't expand and hire employees (which we will)
that definitely sounds worth the 20k investment right? we could pay it off in full in 2 or 3 months feasibly.
but... let's be realistic.. like i said, if someone says you can do something, expect about 1/4th of that, and do those numbers as a worst case scenario.
With the 13k we have coming over 14 months, if we did the same amount of sales next month, we'll have 26k which will more than pay back that 20k loaned.. the interest will be about 5k at the 3rd year of the loan. we could pay it back over 14 months and have profit left over if we shut the doors and never did another sale..
so given that, let's look at what 10% closing would be.
we would make about 8600 the next month from the 20k we invested putting us down 11500 (which is as much as what we already have coming to us over 14 months.... the total we'd have coming to us at that point would be over 95k over 14 months. we wouldn't have enough to put 20k towards buying those leads again the next month, and if we go back to what we were doing and making the same sales we've proven we can make with the leads we have, we'd make close o 19k revenue the next month, close to 30 the month after, which means we could buy more of those leads and explode again - feasibly hitting much better than 10% the next time around.
regardless, no matter WHAT we do, or how poorly we do, we WILL make enough to pay back the loan, but.....
i'm still scared..... that's a lot of money to borrow and though i know i'm 99.9% positive that we will be able to pay it back in no time at all, even if we do poorly, there's still a great deal of hesitation.
i know that it could only do good for us.
one of my bigger hesitations is that the loan has to be taken out in MY name. my partner doesn't have a good enough credit score to get a loan, and the loan we're approved for will not allow me to put his name on it. this means i can't technically make him liable for his portion
however, i'm the majority owner of the company, and i am the primary name on the bank account, my girlfriend of 3 years is the accountant, etc.. the partner doesn't have access to the account, though technically, if he takes his ID, he could pull money from it directly.
I could very easily stop all payments to that account and switch them to my personal account and collect any incoming revenue if he for some reason got flaky. However, if he was an asshole, he could pull whatever money is in there out and close the account, but couldn't change it to where he receives the future payments. Only i have the authority to stop the payments from going into that account.
with all of that said, i have absolutely no worries that he would