Expert: Christine Janklow - 1/16/2007

Question
I started my manufacturing business 10 years ago on a promise of large orders from a customer that I later found out just wanted to use me to lower their cost from their current vendor. With a new house, I didn't have any security to offer a bank so I used all my savings to buy equipment and cover the start up expenses. Only after I quit my day job and spent all my money did I get the phone call from my customer that they signed a 5 year contract with their current vendor and had no plans to ever buy from me.

I decided to try and make a go of it anyway. I secured customers and started filling orders but I have never really had the cash flow to make the operation smooth and run properly, waiting every month for checks to come in just to run the next order. As a result I am always loosing customers because I can't deliver on time and several of the customers this past year not only cancelled their orders but took products and won't pay for them because they know I can't afford to come after them legally. They have taken everything I had replaced back into my savings. My wife sees the past ten years as a failure because I don't have this great success story like she expected and refuses to allow me to use the equity I now have in my home to fund what she calls my money pit.

Do you have any suggestions on how I can get the working capitol I need to properly fund my company without using the equity in my home as collateral? I have created a niche market and most of my customers have told me they would come back if I can prove to them that I can deliver on time. Without proper funding I produce $250-400,000 in gross sales but I know with the proper funding I could do $1,000,000 the first year and table off at $15-18 million in about 7 years but without the proper funding I am pretty much done. Banks continue to decline all my applications sighting that fact that I am continually late on my bills and my credit is poor. All of which is a direct result of not having adequate funding. Should I listen to my wife and friends and close or is there some options that I don't know about?

Thank you for any advise you can offer. I have never seen this site before. The idea behind it is quite unique.

LeRoy  

Answer
LeRoy:
Thank you for your question. It is an important one, and an experience that many business owners encounter. It seems that this experience may serve as a real pinnacle for the next chapter in your vocation, but in order to gain direction you must first do a little "soul searching" in order to really know why you got into your business in the first place. If the motivation was simply to capitalize on a sales opportunity and make some quick money, well there are many ways to do that with less risk. However, if you saw a void in the market and had the vision of filling that void with an awesome product at a competitive price, coupled with excellent service then I would assess that you followed true entrepreneurial spirit. Once you have answered this for yourself, then you can determine if you should go on until you get it right. If you are going to move forward with your company, you MUST get some professional advice. Learn from what others in your industry have done and how. Join a trade organization, network, research or whatever to build your knowledge of how to compete effectively. If you enjoyed this website than I have another one that I highly suggest you visit www.score.org. These are volunteers that have been in business and create business plans for individuals like yourself. Furthermore, if you can find a chapter in your area, make an appointment and go see someone in person. As it relates to your capital, you might be able to qualify for an SBA loan, once you have a viable plan in place. If your credit is poor, there are a couple of things you can do; get with a reputable credit counseling firm such as Care One Credit to reduce your interest rates or settle the debt, which reduces the amounts you owe and gets them paid off in 36 months or less. If the latter is something you wish to explore, feel free to visit our website www.franklinmediation.com. Again, thank you for your question, I wish you the best in getting matters turned around, just make sure you are doing it for the right reasons.