Ask HN: Smart ways to look at fairly small ($15-30k) business investment?

https://news.ycombinator.com/item?id=33336569

by lostgame • 4 years ago

5 10 4 years ago

news.ycombinator.com

Hey HN -

Due to some obscure industry connections, I've come upon a very solid opportunity to acquire an extremely rare piece of unusual manufacturing equipment that's a step or two away from essentially printing money. I'm obviously not going to be super specific, but it's also not a piece of gear that a lot of other people know how to use; but I fortunately have a lot of education and experience in.

That being said; I've personally never actually lent money of any kind before, much less for a business idea. Honestly - I'll be the first to admit I'm not knowledgable in that regard.

I've assembled together a small business plan with manufacturing costs and profits, sources to back up the dire need for this particular product, etc; but I personally have little idea where to go next, and time is of the absolute and utmost essence.

Where is the best place to turn for a fairly small business investment like this? Should I be looking for a personal investment? Should I be turning to a bank?

Thanks for any and all advice, I'm hoping this community is a decent resource to get some good guidance.

EDIT: very, very grateful for the advice so far!

yuppie_scum• 4 years ago

Can you take out a HELOC?

lostgame4• 4 years ago

Unfortunately, I don't own a home; or obviously that would be the first go. :(

Qtips87• 4 years ago

What kind of return are you talking about for $15-30k investment?

lostgame4• 4 years ago

I did a basic calculation online. Over 2-3 years I can; to the best of my understanding, given a $20k investment, guarantee at least a $30k return; which would be a 50% ROI. It could be more, but it certainly wouldn't be less.

mattbgates• 4 years ago

It's implied you've come up with a business plan and you state you have sorted out how much things cost though you should probably take inflation into account and your profit margin is likely going to need to be increased to make up for those costs.

The other research you'll need to do is supply and demand. Is what you're doing even in demand and if so, how much supply will you need? Will you need a patent for your product? It seems like you've already done this as well.

If you do get one... once you have that patent, you could approach other companies and see if they are in the market for your product. They can license it from you, ultimately funding your operation, and allowing you to do more, while also giving you the reputation and customers you'll need.

It's a fairly small business investment you seek... YOLO is a good philosophy to have. Think of it as funding another college degree but instead, it's your actual business. You have two options with this: take the risk or don't at all. You'll be more upset with the latter, especially when someone else comes up with the idea and runs with it. You'll only wish you did it.

If you succeed, you'll turn your small investment into a fortune. If you don't succeed, you'll just owe some money to the bank. Another day.. another dollar.. we've all been there.

If you can't find business partners in the beginning and are just seeking the loan, I'd suggest looking around your town for a credit union or a small bank who can probably give you a better interest rate than most. I personally stick with my Discover card that often supplies loans with 5% - 6% interest, which is often better than most, especially in this economy. It is rare, but there are bank/fund/credit companies that value loyalty with good credit out there.

A search of "small business banking" and "small business loans" after you've established your LLC may also help, with banks giving you a pretty good deal just for being a new business.

I hope this advice helps you somewhat... but you do sound confident in what you're doing, so do it. Remember.. most of the greats started out in their garage... and got help from their parents. They started somewhere, believed in what they were doing, even when the rest of the world couldn't even grasp the concept.

So get going on this opportunity!

lostgame4• 4 years ago

I actually work 9-5 for a bank as a software at the moment, however; I'm leery of asking for a small business loan as it obviously indicates a long-term interest in leaving the company. Should I be worried about that? Realistically it would be a year or two before I'd leave the bank and I'd be doing this on the side.

Thanks so much for the encouragement. I really need it. I feel like I'm stepping out onto a precipice here but I also feel like I have to! Nobody is going to fulfill this opportunity for me.

hn2022hn20222• 4 years ago

Consider getting an SBA loan and ask for more than you need, also you could ask your local city or Chamber of Commerce.

lostgame4• 4 years ago

I live in Canada; I'm not really sure what the equivalent of an SBA is up here; but thank you for giving me the direction to go in! :)

hn2022hn20222• 4 years ago

https://ised-isde.canada.ca/site/canada-small-business-finan...

__d• 4 years ago

Two thoughts:

When seeking investment, it's usually a bit of a red flag when someone asks for a range, especially one that's relatively wide. In this case, the absolute numbers are very small, but asking for $X or two times that, sounds like you don't really know how much you need. That suggests your business plan is very fuzzy, hence the red flag. If the range is because there's a couple of options for how to do it, it's usually good to just pick the best one, and present that.

Second thought: for $15k, that's pretty squarely in the range possible with a credit card, assuming you're decently employed. It's a horrible interest rate, but if your expected return is high (per your answer to another question), you can cover it, and that way you don't miss the opportunity. You can then seek a partner, small business loan, government grant, angel investor, friends-and-family investor(s), or some combination of these, once you've proven the ability to generate a profit.

Best of luck!

Ask HN: Smart ways to look at fairly small ($15-30k) business investment?

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