Monday, April 16, 2012

Waffling

So I have been thinking a lot recently about the possibility of taking out a very small loan for my business (thinking $2000-$3000) and I keep waffling back and forth on whether or not I want to take this step. I am looking for any and all feedback that you are willing to share with me - the good and the bad. I am not sure I will even be able to get a loan to begin with as my credit is not exactly what you would call exemplary. But here are the pros and cons as I see them now:

Pros:
- Would allow me to do more with my business quickly as I would be able to buy several things that I need to do bigger shows.

- Would allow me to try to be accepted to art fairs as they are more expensive to get into - and during warmer months they are mostly outdoors which would require a tent.

- Although this is not a guarantee - it would allow me to make more money as I feel an art fair is more my market than craft shows.

- And finally - I believe that getting the loan would actually allow me to make this a legitimate business - one that I do full time - or nearly full time.

I am not putting this as an official bullet point - but I do feel as though I am being "nudged" to do this - that I need to do this. Maybe it is my sub-conscience. Maybe it is the universe. Maybe it is God. I have no idea, but I am just feeling this way.

Cons:
- If  I do not do well, would I be able to afford to pay the loan back?

- No guarantee that I will even be able to get into the shows that I want to get into - most have a non-refundable "jury" or "application" fee of $10-$35 - do I want to lose that money?

- Would I be able to make the inventory required to do these larger shows?

So - there's my list - does anyone have any more input? I am really at a loss of what to do.

5 comments:

SueLacy Designs said...
This comment has been removed by the author.
Sweet Seahorse said...

Julie, the cons you have mentioned are legitimate ones that ALL businesses must consider. If the loan is something that you really want then go for it. This is clearly something you want and need to do, so listen to your heart and do what you desire. Yes it will be scary, but I bet you will also feel lightened of a burden you are not even aware you are carrying!
xXx Helen

crazygirl said...

Here are the questions I have so far.
One, as the amount is relatively small, have you considered researching and applying for a small business grant for women?
Two, how long would it take you at the rate you are making and selling your gems to save up that amount instead of borrowing?
Three, would the time needed to save that amount justify the interest rate you would be charged for instant gratification of a loan? (This is not to suggest that you shouldn't get the loan, but to inspire thought such as: how much revenue could you earn with the upgrades to your business that you couldn't earn without it, how much would you save in interest rates if you could apply all your jewelry profits to saving for the upgrades, and other variables along those lines.
Those are the primary questions I would need answers to before I (in my own business) would proceed in either direction. When it comes down to it, this is your business and your choice; however, as a friend I would want you armed with every tool possible for success. You make incredible products and I know you can do very well. Do well.

SueLacy Designs said...

Interesting and exciting topic! I’ve been thinking a lot about what direction to take my business, too. So here is some syrup for your waffle…

Two things jumped out as your bottom line – can you make enough pieces for shows, and can you pay the loan regardless of your immediate success?

No matter what, talk to a couple of banks and see what they can offer you. Find out what your payments will be and decide if they would fit into your current budget. If you can make the payments now, that’s one check in the “go” column. If you can’t, you need a backup plan for paying the loan. Businesses don’t usually make a profit right away… so be sure you can survive that.

Reading your post, it sounds like you’re at a crossroads and need to take some positive action. If you can't without a loan, I think you should go for it as soon as you can. That's just my gut reaction

Don’t worry if you lose some application fees. Part of that is you figuring out your market (because it’s out there) and applying to the right places. That’s some trial and error. Also maybe you want to consider working with gift shops, not just shows.

A compromise plan might be to make inventory all summer and begin applying for fall and winter shows. You’d have time to figure out how much inventory you can crank out, and how fast. It also lets you launch at the busiest time of year / holiday shopping – and you wouldn’t need a tent right away.

Julie said...

First of all - thank you all for your feedback! I really appreciate the time and thought that all of you put into what you left for me here.

You have some very valid points - all of you. It has given me even more to think about.

I would love to find a grant - and although I have done a little research on this, so far I have had no luck finding one - or a resource where I could even apply for one. I think that I will most likely go to the Small Business Administration for some advice to begin with - and go from there. I am hoping that they may have some resources available that I am not privy too.

As for justifying the interest on the loan. Yes, I believe that the loan would absolutely justify the interest rate. I am positively convinced that if I am able to get into the right niche, that I will be able to sell quite a bit - and be able to turn a profit pretty quickly. I am basing this on the fact that I am able to still do pretty well at craft fairs even though my immediate competition may be a lady who is selling $2 crocheted pot holders and hot pads along 2 for $5 bracelets that are strung on stretchy cord. People at craft shows are often looking for a bargain - and yet I am still able to find people who are willing to pay more and like my items enough to buy. I know that this is not the right niche for me at this point and that I do need to go into a higher end environment with my jewelry.

I still have to give this a lot more thought. I hope that I am able to come to a definitive answer soon!